Social Security Act of 1935 Volume 1

TABLE OF CONTENTS

I. Reported to House
A. Committee on Ways and Means Report
House Report No. 615 (to accompany H.R. 7260)-April 5, 1935
B. Committee Bill Reported to the House
H.R. 7260 (reported without amendment)-April 5, 1935

II. Passed House

A. House Debate-Congressional Record-April 5, 10-13, 15-19, May 3, 1935
B. House-Passed Bill
H.R. 7260 (with amendments)-April 15, 1935

III. Reported to Senate

A. Committee on Finance Report
Senate Report No. 628 (to accompany H.R. 7260)-May 13, 1935
B. Committee Bill Reported to the Senate
H.R. 7260 (reported with amendments)-May 13, 1935
 Social Security Act of 1935 Volume 2

TABLE OF CONTENTS

IV. Passed Senate

A. Senate Debate-Congressional Record-May 20, 21, June 12, 14-15, 17-19, 1935

B. Senate—Passed Bill with Numbered Amendments-June 20, 1935

C. House and Senate Conferees—Congressional Record— June 20—21, 1935

V. Conference Reports (reconciling differences in the disagreeing votes of the two Houses)

A. House Report No. 1540-July 16, 1935

House Debate—Congressional Record—July 16—17, 1935
Senate Debate—Congressional Record—July 17, 1935
Appointment of House Conferees—Congressional Record—July 18, 1935

B. House Report No. 1744-August 8, 1935

House Debate—Congressional Record—August 8, 1935
Senate Debate—Congressional Record—August 9, 12, 1935

C. Report on President Signing Bill—Congressional Record—August 14, 1935

VI. Public-No. 271-74th Congress-August 14, 1935

Appendix
Constitutionality of the Social Security Act
Opinions of the Supreme Court—May 24, 1937
Steward Machinery Company, Petitioner v- Davis, Individually and as Collector of Internal Revenue
for the District of Alabama, Respondent Helvering, Commissioner of Internal Revenue, and Welch,
Collector of Internal Revenue for the District of Massachusetts, The Edison Electric Illuminating
Company of Boston, Petitioners, v. Davis, Respondent Carmichael, Individually and as Attorney
General of the State of Alabama, et ah, Appellants, v. Southern Coal and Coke Company and Gulf
States Paper Corporation.
Oral Arguments in Helvering et al. v. Davis—May 5, 1937

Administration Bills
H.R. 4120 (as introduced)-January 17, 1935
S. 1130 (as introduced)-January 17, 1935

Report to the President of the Committee on Economic Security—1935

Listing of Reference Materials

1935 CONGRESSIONAL RECORD-SENATE MA~Y 20 7787

SOCIAL SECURITY
Mr. HARRISON. From the Committee on Finance I re­
port back favorably with amendments the bill (H. R. 7260)
to provide for the general welfare by establishing a system of
Federal old-Le benefits, and by enabling the several States
to make more adequate provision for aged persons, dependent
'and crippled children, maternal and child welfare, public
health, and the administration of their unemployment com­
pensation laws; to establish a Social Security Board; to raise
revenue; and for other purposes, and I submit a report (No.
628) thereon.
The VICE PRESIDENT. The bill will be placed on the
calendar.
 1935 CONGRESSIONAL RECORD-SENATE MAY 27 822
administering those laws in their own way, for their own people
whom they find to be In need..
To sum up. the social-security bill makes It possible for millions
of persons to build a regular income for their old age during their
OLD-GEECUITY-DDRSS
Y SEAM ARRSONproductive period of life, and In addition to this, by matching
B 5E~QB ARRSONState
OLD-GE ECURTY-DDRSS funds, assist the States to take care of those so unfortunate
Mr. M~INTON. Mr. President, I ask unanimous Consent as to face old age without the annuities previously mentioned, or
to have Printed in the RECORD an address delivered over the any other income of their own.
radioThe necessity
in old of
rai. on the 26th instant by the Senator from Mississippi destitution agethe
can bill makingappreciated
be readily this twofold
whenattack upon
one realizes
IMr. HARRISON] on the subject of " Old Age Security." the terrific cost of trying to meet the problem by merely helping
There being no objection, the address was ordered to be the States to pay gratuitous pensions. The number of needy old
Pitdin the RECORD, as follows: people Is steadily increasing. The average length of life is getting
Printedlonger; industrial civilization has made It harder for the young
Among the major hazards cif Uife which the President referred to care for their parents. For these reasons, if all we did was
to in his historic message to Congress last June is the possibility grant aid to the States for old-age pensions, the cost would grow
olf facing a penniless old age. It may happen to any person, no enormously. The actuaries say that If this was the only way of
matter how careful he may be of his Investments, and It Ls almost taking care of the aged needy people, by 1960 the total annual
a certainty for many of our fellow citizens with meager incomes, cost of pensions, to the State. Federal, and local governments
In response to the President's message, the members of his would be as much as $2.OOO,000.000. In writing the social-security
Committee on Economic Security, together with representatives of bill, therefore, It was found necessary to look around for addi­
various groups of citizens and experts In pension systems, studied tional means of meeting this problem; and the thing that has
this Problem for months, and then the Congressional committees been proposed and sponsored by the President is the national
entrusted with this legislation held weeks of hearings and thor- system of old-age annuities which I have already described, and
oughlY discussed the matter in extended executive sessions. Many which will not begin at once, but which will be self-supporting and
plans have been submitted and subjected to the most painstaking paid for In large part by the very people who will get the benefits.
examination. By inaugurating this system--and this is very important--we
The result of this careful labor Is found In the old-age proTi- will be saving ourselves a vast amount of money. for this new
slonis of the pending social-security bill, which has passed the national system will make It possible to cut In half the costs which
House of Reprcsentatives and Is now before the Senate. It Is the we would otherwise have to bear In paying the old-age pensions
best solution which these groups of earnest workers can find to under the State laws. I have said that the actuaries figured that
the problem of both alleviating. and to a large degree eliminating. In the absence of any all-embracing Federal system the cost by
the tragic spectacle of destitution among the aged. 1960 for State old-age pensions would be $2.O000.O0.OO. With
The provisions of the bill with respect to security for the aged the self-supporting Federal system in existence, however, the
may be divided according to these two purposes, first, that of annual cost by 1900 for the State old-age pensions would almost
alleviating, and second, that of largely eliminating the sad prey- certainly be less than $1.000.000,000. This Federal system, there­
alence of poverty In old age. fore. would mean a saving of over a billion dollars a year.
I shall first talk with you about the provisions Intended to It is well worth while to remember this tremendous saving, for
largely eliminate old-age dependence. This Is a most Important It makes Insignificant the small burden which industry will have
part of the bill, and Is the part which is of direct interest to to assume under this uniform national system. The tax on em­
younger Americans. It offers them a secure old age, with an ployers. under this system, does not begin until 1937. and even
assured income built partly by their own efforts, when It reaches Its maxiume in 1949 It will amount, on the
Beginning In 1937 the employees of the country-the regular average, to only something like 1 percent of the regular selling
workers In Industry-will begin paying into the Federal Treasury price of the employers' product. This is indeed a small amount
a very small tax, which will be a minute percentage of their reg- to pay for a system which will save the country over a billion
ular pay check. For every nickel that they pay their employers dollars a year, and will bring assurance of a small but regular
will likewi~se pay a nickel. Thus funds will be brought -into the Income to more than One-half of our working people.
Federal Treasury which, in the course of time, will make It pos- Besides the saving to the Nation as a whole, the annuity Sys­
sible for all those employees to get regular monthly checks of temn will give to the worker the satisfction of knowing that he
anywhere from SlO to *85, after they reach the age of 65 and himself is providing for his old age.
retire from regular employment. Under this Federal system the The social-security bill Is the nearest approach to the Ideal
first regular benefits will begin In 1,942. The amount which a that could be reached after months of patient study. It is within
man will receive will depend. of course, upon the amount of money the financial ability of our Government and achieves in the
which he earned during the years when he was employed and largest measure found possible the Ideal of our great President of
upon which he paid the-se taxes. The taxes that will be paid will banishing the gaunt specter of need In old age.
gradually build up a sound reserve, which Is to be Invested. mnak- President Roosevelt, his Committee on Economic Security, the
Ing it possible to continue these regular annuities without having House of Representatives, and the United States Senate are mak-
to Impose any other taxes to raise the money. If a person dies Ing these efforts to establish a sound and far-reaching method of
before reaching 65. his family receives the amount accumulated dealing with the problem of destitution In old age. In taking
for him, and this Is also true for persons who have contributed this great forward step we cannot expect perfection all at once;
too short a time to build up any appreciable annuity, but In the social-security bill we have an. Instrument which in­
This plan is expected to take care of a majority of our people augurates a program that is at once economical and humane, and
in the future, but there are some groups necessarily omitted under which will be a legislative landmark in the history of the efforts
this system, because of the fact that they are not employed by of the Congress to carry out Its constitutional duty of promoting
industry. It was thought proper, and the measure accordingly the general welfare of the man and women of the United States.
provides, that these groups, such as farmers and professional men,
be also given the opportunity to build an annuity. Persons who SOIA SEUM--DR BY SENATOR THO"A OF UTAHK
desire. may. In very small Installments or by lump-sum. payment. Mr. BACHMAN. Mr. President, on Friday last the dis.­
purchase annuities from the Treasury, paying them up to $100 tinguished Senator from Utah tMr. TiHosuLs] delivered over
per month after they reach 65.
There Is yet a third group to consider, those who now, or in the ra8dio a brief but very interesting address on the broad
the future, face a dependent old age, and have not been able phases of the social-security program. I ask unanimous
to secure either of the Annuities which I have just mentioned, consent that his address may be printed in the RECORw.
For a complete old-age program this group must also be con­
sidered. This is the second part of the plan-providing for those There being no objection, the address was ordered to be
whose old-age dependency cannot be eliminated by these annuities, Printed in the RECORD, a~s follows:
As Is natural and fitting for such legislation in our country,, the In responding to this invitation of the National Broadcasting
movement for old-age pensions began in the several States of the Co. to discuss social security It will not be my purpose to defend
Union. The State legislatures acted and the State governments or ~talkcnenn h o~lscrt c hc spnigi
aind county governments administered the laws. Thrytre oges Ikonering thedicsaocial-securityatwIch Its pendin inpct
States, aswelathTertreofAaka.1Hwiaven as a political concept. Anything which will better the condition
acted old-age-pension laws. In 1934 over *30,000.000 was spent In of the men, women, and children, who live In a given country,
these States for 230.000 pensioners, and the average pension paid and which will enable men, women, and children to live a,
to an aged person was about $15.50 per month, broader, better, and more abundant life may be justified as a
Under the social security bill the Federal Government will come proper governmental function. To justify It under our American
to the assistance of the States In making payments under their Constitution may be relatively dificult, but surely it has a piace
old-age-pension laws. The average pension now paid by the when consideration Is given to the general-welfare clause of our
States is about $15 per person per month., Accordingly, up to $15 Constit-ution~s preamble.
a month, the Federal Government will match whatever the States As a sound economic principle the theory, Of social security
appropriate. This Federal aid will be given Immediately to each used as a political concept is merely the taking over into politics
State with a satisfactory plan for the administration of old-age of the social and economic Idea of Insurance. The econoicrle
pensions within its borders. Thus, the Federal Government will theory behind insurance Is that many people donate a little for
share equally In the generous work of helping needy Persons above a long time that some few may enjoy the fruits of that dona-_
the age of 65 years. tion for a little time. Or to mak the theory apply to the Indi­
The administration of the State laws winl be left to the States. vidual as It does in cawe of life insurance, small premiulms paid
with an absolute minimum of Federal participaltion other than over a Long period make It possible for beneficiaries to receive
in the actual granting of the money Itself. It Is right and proper large sums. Insurance Is merely financ used socially. Much
for the States., wher the old-age-pension laws began, to go an of our financia organization in socialized finance.
8224 CONGRESSIONAL RECORD-SENATE MAY 27
A social-securIty program Is very, much larger and more com­
prehensive than a recovery program. In order to become effec­
tive in our country It will be necessary for the program to meet
the requirements of our constitutional scheme, that Is, It must
meet both Federal and State requirements.
This In itself is an aspect or social politics because It develops
the partnership idea between the Federal and the State Govern­
ments and emphasizes what every citizen of the United Steates has
known since the adoption of the fourteenth amendment, that
American citizens have a dual citizenship: that Is. they are c~ti­
zens of the United States and of the State in which they reside.
The social-security program must be all-embracing because
each of four great factors related to the social-security program
is related to the other three, that Is, the old-age-pension idea
to become effective, must be thought of as part of the whole
scheme instead of a scheme by Itself, because the old-age pen­
sion must come after years of planning if It Is ever to succeed
properly. It has the aspect of retirement, and that, too, honor­
able retirement. The thousht Is not just to make the aged
people Independent In their old age; It Is also to take the respon­
sibility for caring for the old off the shoulders of the young.
This, of course, makes for better and happier young lives as well
as better and happier old ones.
The program. too, should provide for early retirement In order
that men may fill the responsible positions of life at an earlier time.
You see, therefore, old-age Insurance is related to unemploy­
ment: It Is related to the idea of economic independence not only
for those who are Insured but also for those related to them, and
It makes the Insured the agent for his Government In making for
better and broader living. That the persons to be benefited must
contribute goes without saying, because any good which comes
carries with it a responsibility. Then, too, we want old-age bene­
fits to be honorable. The persons who are to receive pensions
should be encouraged to feel free in taking them, and free from the
thought they are singled out by a paternal state as helpless Indi­
viduals. Our whole public-school system would faUl If a mother
of many children ever thought it wrong to send all of them to
school because her neighbor, perhaps, has only one or none to be
trained. My point there is that no one now questions the right of
a child to be educated. Just so. the time must come when no one
shall question the right of those who are past the earnis,., age to
live a life free from the ordinary economic worries. All must con­
tribute for the good of all. Public attention to social security will
result In persons taking for themselves private annuity policies to
augment the public ones.
The partnership Idea Is the one that!I would stress, Partnership
between the Federal Government and the States; partnership be­
tween the old and the young: partnership between the employer and
the employee; partnership between those out of a job and those who
are working; and partnership between publlc and private insurance
Institutions. All will he benefited. The prime fact of man's inter­
dependence with other men should be brought Into our political
and social life and made part of our thinking. Too long we have
left this to the church Institutions.
American democracy can be preserved only by preserving the
Individual In that democracy. An American must remember that
he Is one In a group of 125.000.000 others. Het must never fuse
himnself Into a fraction and think of himself as one-one hundred
twenty-fire millionth of the whole. The individual as a political
entity will last only so long as private property and private owner­
ship last, Social security will teach the Individual throughout his
whole life the notion of Interdependence and in addition to that it
will teach the value of ownership. In the past we have tried to
attain these ideals by stressing, in our teaching of the children,
thrift and competition. The real lesson of life will come when men
realize that they cannot be happy while their neighbors are sad.
 1935 June 12, 1935 CONGRESSIONAL RECORD-SENATE 9191

SOCIAL AIMS OF ADMINISTRATION

Mr. LEWIS. Mr. President, I submit. for publication In1
the RECORD a brief article appearing in the Washington Star
of June 10. 1935, entitled " Roosevelt Explains Social .Aims at
Press Conference ", together with a definfiition of the new
deal by the junior Senator from Nebraska [Mr. BuRKE],
There being no objection, the articles were ordered to be
printed in the RECORD, as follows:
[From the Washington Star of June 10, 19351
ROOSEVELT EXPLAINS SOCIAL AINMS AT PRESS CONFERENCE
By J. Russell Young
President Roosevelt today in a brief and extemporaneous state­
ment at his press conference explained the social objectives of his
administration.
..The social objective, I should say, remains just what It was.
which is to do what any honest government of any country would
do-to try to increase the security and the happiness of a larger
number of people In all occupations of life and In all parts of the
country; to give them more of the good things of life; to give them
a greater distribution not only of wealth In the narrow terms but
of wealth in the wider terms; to give them places to go in the sumn­
mertime-recreation; to give them assurance that they are not
going to starve In their old age; to give honest business a chance
to go ahead and make a reasonable profit and to give everyone a
chance to earn a living.
"It Is a little difficult to define It, and I suppose this Is a very
offhand definition, but unless you go Into a long discussion It Is
hard to make It more definite. And I think, however, that we are
getting somewhere toward our objective."
His remarks were In reply to a question.

DEFINITION OF THE NEW DEAL

By Senator EDWARD R. BtIRxz, of Nebraska
The new deal is an old deal-as old as the earliest aspirations
of humanity for liberty and justice and good life. It Is old
as Chrnstian ethics, for basically Its ethics are the same. It is
new as the Declaration of Independence was new, and the Con­
stitution of the United States.
Its motives are the same; It voices the deathless cry of good
men and good women for the opportunity to live and work In
freedom, the right to be secure in their homes and In the fruits
of their labor, the power to protect themselves against the ruth­
less and the cunning.
It recognizes that man Is Indeed his brother's keeper, insists
that the laborer is worthy of his hire, demands that justice shall
rule the mighty as well as the weak.
It seeks to cement our society-rich and poor, manual workers
and brain workers-into a voluntary brotherhood of free men.
standing together, striving togetber, for the common good of all.
SOCIAL SECURITY
Mr. HARRISON. Mr. President, I move that the Senate
proceed to the consideration of House bill 7260, the so-called
'*social-security bill." I desire to state that if the motion
shall be agreed to, we will not proceed with the bill today,
but will do so tomorrow,
The PRESIDENT pro tempore. The question is on agree­
ing to the motion of the Senator from Mississippi.
The motion was agreed to; and the Senate proceeded to
consider the bill (H. R. 7260) to provide for the general
welfare by establishing a system of Federal old-age benefits,
and by enabling the several States to make more adequate
provision for aged persons, dependent and crippled children,
maternal and child welfare, public health, and the admin­
istration of their unemployment compensation laws; to es­
tablish a Social Security Board; to raise revenue; and for
other purposes, which had been reported from the Com­
mittee on Finance with amendments.
 June 14i, 1935
1935 CONGRESSIONAL RECORD-SENATE 9267
may expect to continue in the years to come. The depres­
sion did not create but merely accentuated and forcefully
brought to our attention, human suffering resulting from
these principal hazards of life.
This measure includes several related subjects. It attacks
major problems presented by recurrent unemployment, by
destitution of the aged and blind, and of physically handi­
capped or orphaned children, and seeks to accomplish these
purposes largely through encouragement given the States to
meet these problems by State action.
Before mentioning any details I wish first to call atten­
tion to the general outline of this measure. Neglecting for'
the moment its provisions dealing with public health and
vocational education, this legislation may be classified into
three general kinds of provisions, designed to meet three
major problems: (1) Pensions for the aged and blind, (2)
provisions for child welfare, and (3) unemployment-lnsuir­
ance provisions.
SOCXA SEC~rfYI might here mention the Federal appropriations required
SOCIA SECRITYfor the pun-poses of this legislation. The measure authorizes
The Senate resumed consideration of the bill (H. R. 7260) about three and one-half million dollars for Federal super-
to provide for the general welfare by establishing a system visory and administrative expenses in carrying out the provi­
of Federal old-age benefits, and by enabling the several sions encouraging State pension and child-welfare services:
States to make more adequate provision for aged persons, and for aflotments to States authorizes $49,750,000 for State
dependent and crippled children, maternal and child wel- old-age pensions, $24,750,000 for dependent children, gener­
fare, public health, and the administration of their unem- ally called "mothers' pensions ", and $11,991,000 for other
ployment compensation laws; to establish a Social Security Items, including child health and welfare services, pensions
Board; to raise revenue; and for other purposes. to the blind, and vocational education. Eight million dol-
Mr. HARRISON. I ask unaninous consent that the for- lars is authorized for augmenting the public-health service
mal reading of the bill may be dispensed with and that the of the States. Thiis makes a total for the fiscal year 1938 of
bill be read for amendment, committee amendments to be a little less than $98,000,000. The measure authorizes in-
first considered, creased appropriations with respect to pensions and voca-
The VICE PRESIDENT. Is there objection? The Chair tional education in succeeding years.
hears none, and It is so ordered. In addition to the above, there Is an authorization of
Mr. HARRISON. Mr. President, as briefly as possible I $4,000,000 as a grant in aid to assist States in administering
shall explain the provisions and purposes of the pending unemployment insurance for 1936, and $49,000,000 annually
measure, the so-called " social security " bill. I shall try to thereafter, which amounts will be more than offset by a tax
make the explanation as brief as possible, and I trust Sena- imposed by the measure on employers of four or more persons.
tors will permit me to finish my analysis before I shall be i~kewise, it is thought that the other taxes the bill imposes
asked to yield for any questions. At the conclusion of my on employers and on employees will offset the fiscal require-
statement I shall be glad to answer any questions with ments of Federal annuity provisions of the measure.
respect to the bill that I can or make any further explana- As I have stated, besides augmenting existing public healtb.
tion that may be desired. and vocational rehabilitation services, the measure has three
In general, the purpose of this legislation is to initiate a general types of provisions: First, those dealing with pen-
permanent program of assistance to our American citizens sions for the aged and blind; second, those pertaining to
in meeting some of the major economic hazards of life. It child welfare; and, third, unemployment insurance legisla.­
is, of course, impossible for all social problems to be met tion- At this point I wish to discuss briefly each of these
with this measure, nor does it attempt to do so. Many classes in the order named.
problems remain untouched by Its provisions; some because In taking up the problem of security for the aged. I should
not within the purview of Federal legislation, and some first like to mention a few facts pertinent to this question.
because it was decided proper that this legislation should be Some seven and one-half millions in this country are over
directed only against those major causes of insecurity for 65, and best estimates indicate that about a million of these
Which experience has developed an efficient remedy, are dependent on the pubio for relief. A huge number are
Mr. LONG. Mr. President, will the Senator yield for a, oil the Federal Emergency Relief, which was not designed
question? and is not suited to meet this permanent problem.,
The PRESIDENT pro tempore. Does the Senator from As the trend of our civilization leads away from the farm
Mississippi yield to the Senator from Louisiana? and into the cities, a growing percentage of our people have
Mr. HARRISON'. I had hoped that I might be permitted come to depend for subsistence on a weekly Pay check, and.
to finish my explanation before interruption came. but I when cut off from employment because of age, have become
yield.. dependent on the helping hand of public charity. We are
Mr. LONG. I do not want to ask about the bilL. I want all familiar with the PoOrhOUses to which many of these aged
to find out what course the Senator proposes to take with must now turn, and those with experience in the local ad-
reference to the bill. Are we first to consider committee ministration of poorhouses will recognize the wastefulness
amendments? and Inefficiency ot this method of taking care of the needy
Mr. HARRISON. Unanimous consent has been granted aged.
that committee amendments shall be first considered. Many States have sought a better method for meeting this
Mr. LONG. Then it will be some time before we come to Problem. Thirti-three of Our States and the Territories of
the point of the introduction and consideration of any indi- Alaska and Hawaii have State pension laws for the care of
vidual amendments which Senators may wish to offer? destitute aged, and the number of beneficiaries Increasea
Aft. HARRISON. I hope we may expedite the matter as rapidly despite the financial dufiimelties confronting State
much as possible, but I doubt whether we will reach that and local governments. Becamse of this financinl stringency,
point for several hours as might be expected, pensions In many cases are neces-
Nor it the bill intended as emergency legil~ation, to cope sarily quite inadequate.
with an emergency situation, but rather it Is designed as a Further, the States face an increasing burden of Pension,
well-rounded program of autack on principal causes of inse- costs in the years to come. The percentage of people ove
curity which existed prior to the depression and which we 65 to the total population Is rapidly Increasing, and & study
9268 CONGRESSIONAL RECORD-SENATE JUNE 14
of age groups as shown by the census, indicates that the $17.50 where he earned wages 5 years.
number of these old will be about doubled by 1970. So, $22.50 where he earned wages 10 years
obviously, the burden of taking care of these increasingly $32.50 where he earned wages 20 yeams
large groups of needy aged should be met in some manner $42.50 where he earned wages 30 years
other than merely the present methods. $51.25 where he earned wages 40 years.
The provisions of the social-security bill dealing with this A lump-sum benefit of 31/2 percent of all wages Is provided
problem may be grouped according to the two purposes for the estate of any person dying before 65. and a like
sought to be accomplished; first, that of alleviating, and amount is paid any person retiring at 65 and not eligible
second, that of largely eliminating the said prevalence of for benefits. For example, suppose such wages after 1936
poverty in old age, amounted to $10,000, this benefit would be $350.
Eliminating, so far as possible, the necessity of providing a This plan Is expected to take care of a majority of our
charitable pension for aged people is a primary object of this people in the future, but there are some groups, not em­
legislation. In 1931, while Governor of New York, President ployed by industry, necessarily omitted under this system.
Roosevelt felt this need, and in a message to the legislature It was thought propcr, and the Finance Committee amend­
with respect to the gratuitous old-age pension of the State, ment to the measure accordingly provides, that these groups,
said: such as farmers and professional men, be given an oppor­
I have many times stated that I am not satisfied with the pro- tuinity, as similar as possible to those in industry, to build
vision3 of this lawv. its presrnt form, although objectionable as an annuity. Persons who desire may, in very small install­
providing for a gratuity, may he justified only as a means Intended ments, or by lump-sum payment, purchase annuities from
to replace to a large extent the existing methods of poorhouse and
poor-farm relief. Any great enlargement of the theory of this law the Treasury which will pay them up to $100 per month
would, ho*ever. smack of the practices of a dole. Our American after they reach 65. These annuities are, of course, on an
aged do not want charity, but rather old-age comforts to which actuarial basis, and accordingly require no tax measure or
they are rightfully entitled by their own thrift and foresight in the approprain n oeI rvddI h il
form of Insurance. It Is, therefore, my judgment that the next prainadnoespovednthbl.
step to, be taken should be based on the theory of insurance by a There is yet a third group to consider, those who now or in
system of contributions commencing at an early age, the future face a dependent old age and have not been able
It has been found actuarially possible, and the bill pro- to secure either of the annuities which I have just men­
vides a method, for those in industry to contribute from year tioned. For a complete old-age program this group must
to year a tax, covered into the Treasury of the United States, also be considered. This is the second part of the old-age
sufficient to bear the costs of an old-age annuity for those security plan-providing for those whose old-age dependency
in industry, cannot be eliminated by these annuities.
These are provisions for what we may term, for conven- The social-security bill authorizes the appropriation of
lence in distinguishing them from other pension provisions, $49,750,000 for 1936, and such sumn as may be needed annu­
annni1937, ally thereafter, to be allotted the States with approved plans,
Beginning in13,all employees in the United States, save to be used in making payments under their old-age pension
casual and agricultural labor, private domestic servants, em- laws. The average pension now paid by the 33 States and
ployees of the Federal or State Governments, and of non- 2 Territories which have already enacted these laws is about
profit religious, charitable, scientific, literary or educational $15 Per Person Per month. Accordingly, up to $15 a month
employers, will pay a Federal tax of 1 percent of their wages, per beneficiary the Federal Government will match whatever
up to $3,000 per year salary, which tax will be increased one- the States appropriate. This Federal aid will be available
half per cent each 3 years, until it reaches a maximum of 3 immediately to each State with a satisfactory plan for State
percent for 1949 and thereafter. Employers of these em- old-age pensions and will result in the Federal Government
ployees also pay a similar tax at the same rates, based on the bearing half the costs of paying pensions up to $30 per
taxable pay of each employee, and also are required to deduct month per beneficiary. If the State wishes to add to its
the employee's tax from his wages, and report and pay both costs and pay a more liberal pension, of course it Is at liberty
taxes to the Bureau of Internal Revenue. Penalties with to do so.
respect to this tax are those of the revenue act, and as col- The administration of these pension laws Is left to the
lection devices the Commissioner of Internal Revenue may States themselves, with an absolute minimum of Federal
prescribe the purchase of stamps or other tokens. This tax is participation, other than the granting of the money to match
calculated as sufficient to provide funds, covering the cost of State funds. It is right and proper for the States, where
the annuities in the years to come, which will be paid, with old-age pension laws began, to go on administering these
only one or two small exceptions, to those workers in industry laws in their own way, for their own people.
who paid tha tax. The measure provides, however, for obvious reasons, a
These employees of industry are eligible for annuities on limitation on requirements States might set up, and which
reaching 65, if they have paid tax on total wages of might leave large groups Ineligible for a pension in any
$2,000 or more earned during 5 or more years after 1936 and State. It may have a residence requirement of not ex­
before reaching the age of 65. ceeding 5 of the 9 years preceding application for a pension,
The Finance Committee added an amendment which pro- and a continuous residence requirement of 1 year immedi­
vides that a man will receive this annuity only if he has ately preceding application. Further, United States citi­
retired from regular employment. This was based on the zens, who have met the residence requirement, may not be
belief that no person holding a regular job should retain excluded on a citizenship requirement.
this Job after 65, receiving an annuity along with his pay To sum up, for old-age security, the measure provides for
check. Rather, he should retire and make it possible for Federal industrial annuities, for voluntary annuities, and,
others to obtain work. in addition, provides assistance to the States in paying pen­
These annuities are based roughly on the salary which sions to those so unfortunate as to face old age without these
has been earned after 1936. The measure provides a pen- annuities, or other income of their own.
sion, however, of larger amounts where small salaries or a The necessity of the bill making this twofold attack upon
short period under the system would otherwise result in a destitution in old age can be readily appreciated when one
very small pension. The annuity is $15 per month for realizes the terrific: cost of trying to meet the problem by
the first $3,000 in salary before the employee reaches 65, merely grants in aid to the States to pay gratuitous pen­
plus about 83 cents per month for each additional thousand, sions. As I have stated, the number of needy old people
up to $45,000, plus about 42 cents per month for each thou- is steadily increasing. The average length of life. Is get­
sand over $45,000, with the further provision that no pension ting longer; industrial civilization has made it harder for
may exceed $85 per month. the young to care for their parents. For these reasons, If
For example, take the case of a person whose average the measure merely granted aid to the States for old-age
salary Is $'00 per month, retirin~g at the age of 65. His pensions, the cost would grow enormously. The actuaries
monthly pension would be: say that If this was the only plan providing for the aged.
1935 CONGRESSIONAL RECORDL-SENATE 9269
by 1960 the total annual cost of pensicns, to the State. Fed- surance plans, and which administers the contributory an­
eral, and local governments, would be as much as $2,000,- fluity system, is the Social Security Board. Before passing
000,000. In drafting the social-security bill, therefore, it on to the next phase of the bill, that dealing with child-
was thought necessary to look around for additional means welfare, I will mention the main provisions as to the Social
of meeting this problem; and the thing that has been pro- Security Board.
posed and sponsored by the President is the national sys- This is a three-member board, and the Finance Committee
tern of old-age annuities which I have just described, which amended the bill to provide that during membership a per­
will be paid for in large part by the very people who will son could engage In no other employment; that no more
get the benefits, than two members shall belong to the same political party,
By inaugurating this threefold system-and this Is very and established the Board in the Department of Labor.
important-we will thus be vastly reducing the Federal and Board members serve 6-year staggered terms and are.
State burden of paying the gratuitous pension, for this an- with the advice and consent of the Senate, appointed by the
nuity system should eliminate the necessity of a gratuitous President, who also designates which shall be chairman.
pension in at least half the cases. I have said that the This Board is, as I have mentioned, in general the Federal
actuaries figured that in the absence of any all-embracing administrative agency for Federal annuities, and passes on
Federal system the total cost by 1960 for State old-age pen- State plans and other matters with respect to assistance
sions might be $2,000,000,000. With the self-supporting for the blind and aged and for unemployment insurance.
Federal system in existence, however, the annual cost by It appoints and fixes compensation for needed officers and
1960 for the State old-age pensions would almost certainly employers, of which attorneys and experts are not subject to
be less than $1,000,000,000. This system, therefore, would civil service. Its report is, of course, made through the
mean a saving of over a billion dollars a year. Department of Labor.
It is well worth while to remember this tremendous saving Your commrittta's amendment locating the Board in the
to the Flederal and State Governments, in considering plac- Department of Labor was largely because by this arrange­
ing on industry the graduated pay-roll tax it will assume ment savings might be effected, and its work could be better
under this uniform national system. This tax on employers, integrated with other agencies that are now in the Depart­
and the tax on employees, begins in 1937 with equal con- ment of Labor.
tributions of 1 percent, and is 2 percent in 1943. Even when I now direct your attention to the second phase of the
it reaches its maximum of 3 percent in 1949, it will amount, measure, that of child welfare. At the outset I desire to Pay
on the average, to only something like 1 percent of the reg- tribute to the great work the States have done in this field.
ular selling price of the average employers' product. This is and to mention that all the provisions of the bill affecting
a relatively small amount to pay for a system which will children are designed to assist the States.
provide annuities in lieu of gratuitous pensions costing over Telrepolm eaigt hl efr r h
a billion dollars a year, and will bring assurance of a small Th problems
lag inteboe
relatnght
child oewelfare arequthe
tan alfof ur gedpeole.
moencoe
but teguar income, the neglected child, and the crippled child. In
Besides the saving to the Nation as a whole, the annulty addition, the matter of child and maternal health is of vital
system will give to the worker the satisfaction of knowing importnce.
that he himself is providing for his old age. The pending bill has provisions designed to alleviate each
This system of meeting the problem of the needy aged of these hazards.
is the nearest approach to ideal that could be reached after Wt epc otefrtcidwlaepolm hto h
months of patient study. It is believed to be within the Whidinthrespc trokethoers child-welfre probl dem.utateofnth
financial ability of our Government, and achieves in the chlintebonhome, wheesre
atnto
outhere iofcsnadequaeloe in-
largest measure found possible, the ideal of the President come, reiedsirveyto call yourvateyntiontcates dhttevelopedb
and those of us who belleve as he does, of banishing the thme relie00fasurvey Thsothsurv pey windctsthat00 thelrenar
.gaunt specter of need in old age, someh 350,00 faelensupoftethi type, weifith r00000chidrno
Besides the grant in aid to States for assistance in pay- whngch havalbeb heenesupporteby wintherehef. Wrisofthrelif-n
ing pension for the needy aged-and this does not refer to longtere availablen the inecssityuwills asturll arseofthercnow­
one who has reached the age of 65 only, but he must be in usuathes childfrenhin ins tiuona the mothti
er cootanno
need-the bill authorizes $3,000,000 for 1936, and such sum sual aefrte n ttesm ieg u n
as may be necessary thereafter to match State funds for work.
pensions to those totally blind. Approximately the same The problem of keeping such broken families together
conditions attach to these grants in aid as attach to grants has caused 45 States to enacc laws, generally termed
for State old-age pensions, ' mothers' pensions ", and with the termination of the
I do not know when any committee was ever moved more Flederal emergency relief measures it would seem almost im­
than was the Finance Committee when several old gentle- perative that the States be assisted in bearing the financial
men, who were totally blind, were led into the committee burden of providing these pensions.
room by their dogs and presented their case for aid to the The measure meets this situation by authorizing an appro­
needy blind in this country. I may say, with reference to priation of $24,750,000 for 1936, and such amounts as may
the blind, that the provision was not in the bill as it passed be needed annually thereafter, for grants In aid, to be appor­
the House, but is a Senate committee amendment. tioned among the States for use in paying pensions to de­
As indicative of the need of this provision I might men- pendent children. Where the State has an approved plan,
tion two or three pertinent facts. About half of the States the Federal Government thus will bear one-third the cost
already have such pension laws, but State financial strin- of the total pension, except in no case shall the Federal share
gency has resulted in very inadequate provision, exceed $6 per month where there is one dependent child, and
There are more than 65,000 listed as totally blind by the $4 for each additional child where there is more than one
1930 census, which recognizes this as an understatement, dependent child. These limits are roughly in accordance
and of these nearly 45 percent are persons over 65, as much with the limitations in the allowances to the widows and fam­
blindness comes from causes developing late in life. Due to ilies of World War veterans, as the contemplated total pen­
this fact, and the difficulty of finding suitable occupations, sion would amount to $18 for the first child and $12 each for
it is not surprising that less than 15 percent of the blind any additional children in the family.
are gainfully employed. Encouragement to the blind to A State will not have to aid every child which It finds to
become self-supporting is, of course, desirable, but the fact be in need. Obviously, for many States, that would be too
that only a few even of the 15 percent gainfully employed large a burden. It may limit aid to children living with their
are self-supporting shows the necessity of encouraging and widowed mother, or it can include children without parents
financially assisting these State pensions for the blind, living with near relatives. The provisions are not for general
The Federal agency passing on State plans providing pen- relief of poor children but are designed to hold broken fami..
sions for the blind and aged. and State unemployment In- lies together.
LXm---­
 9270 CONGRESSIONAL RECORD--SENATE JUNE 14
The Ways and Means Committee report, in mentioning provides for the state and Children's Bureau to Jointly work
the next problem of child welfare, the alarmingly large out a plan.
number of neglected children, said that they "1are in many To sum up, the provisions of the social-security bill affect-.
respects the most unfortunate of all children, as their lives ing children are for grants in aid to the States, assisting
have already been impaired.,, To assist the States In them in making provision for dependent children in broken
strengthening public-welfare agencies, especially in rural homes, which are usually termed " mothers' pensions "1; also
areas, and thus helping to care for homeless and neglected for child-welfare services, for medical assistance to crippled
children, the measure authorizes an appropriation of $1,500,- children, and for mother and Infant health. in addition, the
000 for 1936 and for each year thereafter. This grant to appropriation authorized for continuing and augmenting
the States is to be apportioned by first giving $10,000 to each existing vocational education and public-health services Wil
State, and dividing the remainder among the States on the be of benefit to children as well as adults,
basis of their respective rural populations, as compared with We have discussed two of the three main phases of this
the total rural population of the United States. legislation-provisions for the aged and blind, and those for
The importance of the provisions for crippled children, child welfare. I have Omitted any discussion of the parts
the third problem attacked, is evidenced by the fact that of the bill dealing with public health and vocational educa­
there are between 300,000 and 500,000 of these, many of tion. This omission is not because I deem these provisions
whom can be effectively dealt with by early treatment. This of small importance, but because they are along traditional
will not only save them from lifelong physical impairment lines, merely augmenting and extending these services, and
but also from being public charges, meeting universal approval. The necessity of the provisions
The measure authorizes $2,850,000 annually to assist the was demonstrated at the hearings by a host of witnesses.
States In meeting this problem, especially in rural areas The third and last great phase of this measure is the attack
and those in economic distress. The appropriation is on a upon unemployment. In discussing the provisions with re­
50-50 matching basis, apportioned first $20,000 to each spect to unemployment insurance, I wish to again emphasize
State, the remainder to the several States based on the that It is not the purpose of unemployment insurance to
number of crippled children and the cost of locating and meet the extraordinary situation with which we are now
hospitalizing them, faced.
The fourth and last problem attacked is that of maternal This situation Is being met by the public-works program,
and infant care. Frnm 1922 to 1929 the Federal Government and If in the future a similar emergency again must be met, It
participated in this program, and all but three States coop- will probably call for some similar effort. The field of unem­
erated. Due to financial stress this work has been curtailed, ployment insurance is essentially that of meeting the normal
and several States have felt unable to continue it. condition of temporary lack of employment, and to mitigate
The American maternity and Infancy death rate, particu- the immediate effects of large-scale unemployment.
larly in rural areas, Is much higher than that of most civil- For in normal times, and in fact even in boom years,
Ized countries, and experience has taught that an intelligent there is always considerable unemployment. Some 3,000,000
program is very effective in remedying this condition. The people who wanted work did not obtain it in the compara­
measure accordingly has authorization for $3,800,000 an- tively prosperous year of 1928. When machinery is-replaced
nually to be used in aiding the States. This Is to be allotted, by more efficient machinery, when overproduction arises
first $20,000 to each State, then $1,800,000 is apportioned from any of many causes, when an industry is dying because
according to the live births of each State, compared to total its product is being supplanted, men are thrown out of work.
live births throughout the country. This is on a 50-50 Further, with little thought directed toward stabilization,
matching basis. In addition, $980,000 is for allotment with- many industries operate with considerable irregularity of
out the necessity of the State matching, based on the finan- employment. There are peak periods and there are low pe­
cial needs of the State in carrying out its plan, and taking rnods, and a plant that employs thousands of men in March
into consideration the live births in the State, and April carries on with merely a skeleton force in the
Approval of State plans for children is vested in the Chil- autumn months. The thousands who are thus dropped face
dren's Bureau, which has done notable work for many years. a resulting period of unemployment, exhausting, in many in­
The measure authorizes $625,000 annually for its expenses stances, their meager savings, and sometimes becoming a
in administration, and for further study and investigation, charge on charity before an opportunity for regular wages
Save this sum, it will be noted, all the appropriations for is again afforded them.
child welfare are granted to and administered by the States It has always been natural'for the cost of this unemploy­
under State law. The apportionment of these funds is ment to fall upon the local community. Those who are out
largely administrative, as I have indicated in dealing with of work first look to their neighbors for help; and, when that
each provision. This is also true with respect to passing on source is no longer sufficient, to their local and State gov­
State plans for child welfare, the principal duties of the ernments. Unemployment may, in extraordinary depres-
Bureau being to make suggestions and to determine whether
State plans meet the requirements set out in the bill, I shall Statnstneesstat the prFbederalt Govhernmsenasitg thepolmoo
briefly mention these principal requirements, which ar be- States tormeet th probemlobuet otherwie thet probarlem iof5­
lieved proper to insure the greatest benefits from the grants lcalle "onoerma"uepomntinn.htprmr so
in aid for child welfare which have been just reviewed. lclcnen
State plans for crippled children, for maternal and child This has long been recognized by the States, and the prob­
health, and for dependent children must each be State-wide lem of meeting this " normal " unemployment has been the
in operation, with the State contributing financially to it subject of earnest study by commissions established by them.
support, and with a State agency charged with final ad- Especially has this been true since 1929, when Increasing
ministrative responsibility, and making reports to the secre- ranks of the unemployed brought the necessity of some action
tary of Labor. The Chief of the Children's Bureau passes on more keenly to public attention.
whether these requirements are met, and, in the case of It is significant that almost every State commission investi­
mothers' pensions, on whether the methods of administration gating the subject urged some form of unemployment insur­
are efficient. In no case, however, does this include jurisdic- ance, and, while differing as to details, uniformly recognised
tion to pass on tenure of office, selection, or compensation of that part-or all of the cost should be borne by employers in
State personnel. In the case of mothers' pensions any per- industry and that reserves should be built up in good times
son whose claim is denied must be given a right of appeal to to help in providing for the welfare of those unfortunates
the State agency, and the plan cannot have a residence re- cut off from regular work by seasonal unemployment, or that
striction excluding any child who lived within the State a resulting from the many other causes found even In normal
year before aid is requested or, in case the child is born times.
within the year, if the child's mother has lived in the State Looking backward, it is easy to see how unfortunate it was
a year. In carrying out child-welfare services the measure that no more steps were taken toward actuaWl Inaugurat­
 1935 CONGRESSIONAL RECORD--SENATE 9271
Ing State unemployment insurance systems. For Instance, If The sixth and last requirement is that the State unem­
the State of Ohio had started unemployment Insurance back ployment funds be deposited with the Secretary of the
In 1923, paying their workers who were honestly unemployed Treasury. This requirement is coupled with the provision
half their wages for periods of not longer than 6 months, the that interest be paid on the State balances, and Is for the
fund would have stayed wholly solvent for 21'/2 years after purpose of safeguarding their Investment. It Is thoughi
the depression began. Probably the rigors of the depression that no matter how soundly invested by the States. there
would have been largely mitigated with such a system in force would come times of unemployment when the investment
throughout the several States. Cer' .inly the regular income would have to be liquldated in large quantities, with a de­
still received by each man who lost his job would not only pressing effect on the securities and a resulting loss.
have kept up his courage in the face of adversity but would In completing my statement on unemployment insurance
also have given him a purchasing power enabling him to con- I wish to call your attention to two amendments the Finance
sume products of industry, which were left unsold on the Committee thought wise to add, which provide for wider
shelves of the clothing store and the grocery. choice of types of unemployment-insurance systems and
One large factor deterring States from acting on the rec- also for a stabilization incentive to employers. As I said
ommendations of commissions for the establishment of un- before, the State of Wisconsin was the first State to pass an
employment insurance has been the belief that it would put unemployment-compensation law. The statute was based
the local industry of the State at a competitive disadvantage upon a very definite philosophy that if employers are given
with industries of States which did not have such systems. a real cash incentive to stabilize and regulate their employ-
"If ", the argument runs, "1this burden, small though it may merit they will be able to make progress in eliminating so-
seem, is placed on the employers of this State, and Is not called " normal"1 unemployment. The Wisconsin law pro­
likewise Placed on the employers of our neighboring States, vides that every employer shall set up reserves against-the
we shall In effect be driving industry out of our State and into unemployment of hNs own employees, and when his reserve
the neighboring States, if we pass this bill." fund reaches a certain amount he will thereafter have con­
The argument was made that if, for example, an unem- tributions reduced so as to pay only such sums as are neces­
Ployment-insurance plan were put into effect in Ohio, and sary to keep the reserves up to this amount. It Is therefore
no unemployment-insurance plan were put into effect in to his advantage to prevent unemployment and so escape the
Kentucky, the industries of Ohio would be affected disad- necessity of large contributions to these reserves. It is
vantageously. easily seen that the heart of this system is the lessening of
While, despite this obstacle, Wisconsin enacted an unem- contributions because of good employment experience, and
ployment compensation law in 1932, and during the past that for it to be effective such credit should be allowed
winter Washington, Utah, New York, and New Hampshire against Federal as well as State tax. The bill was passed
also enacted such laws, other States have been deterred be- by the house allowing only pool-type systems such as will be
cause of the fear of interstate competition, and it has been set up under the New York law and not providing for this
considered a most desirable step for the Federal Govern- stabilizing credit. The senate amendments allow either type
ment to eliminate this barrier to State legislation. of system and also the credit against Federal tax.
This obJect is accomplished by the provisions of title 9 If the provision adopted by the House had been carried
of the bill, which I now call to your attention. An excise through in the Senate bill, then the Wisconsin system would
tax is levied on employers of four or more persons, effective have had to be completely changed. The Senate Flinanee
for 1936. and payable first in January 1937. This tax is for Committee thought that the State itself should decide be­
the first year 1 percent of the employer's pay roll, and In- tween these systems and adopt the one they thought most
creases to 2 percent for the second, and 3 percent for the beneficial.
third and subsequent years. Against this tax, up to 90 The final provisions of unemployment insurance are for
percent thereof, the employer may credit any amount grants in aid to States with approved systems, for their use
he pays the State for State unemployment compen- in paying the costs of administering the system. As I have
sation. This places employers of all States on the same stated, there is a Federal tax and an allowance of 90 percent
footing, and allows and encourages the inauguration of State of credit against this tax because of contributions to State
compensation laws by eliminating the fear of driving busi- unemployment systems. The remaining 10 percent, which
ness out of the State by the imposition of the burden of remains in the Federal Treasury, is thought sufficient to
supporting a State unemployment-insurance system. offset an appropriation authorized by the measure, to be
The credit of State contributions against this Federal tax allotted to States for these administrative costs.
Is allowed whenever the Social Security Board, established Mr. President, I desire to congratulate the House of Rep­
by the measure, finds that the State law is a genuine unem- resentatives on the great improvement they made in the bill
ployment-insurance measure fulfilling a few minimum stand- which was originally presented. They have made a marked
ards set up in the bill. These standards are not designed to improvement and I believe the Senate Committee on Finance
limit the States from using wide discretion in the types of has further improved the proposed legislation.
unemployment insurance established by them, but only to Mr. President, in concluding this statement, may I add
Insure the satisfactory working of any unemployment-coin- that the development of our industrial civilization has pre­
pensation system. sented these pressing problems which this legislation seeks
There are six of these requirements. First, so as to pro- partly to meet. The President has pointed the way, and
vide a close check-up on malingers, benefits are to be paid the measure before you is the result of careful study by the
through public employment offices, where the State has such Committee on Finance. The committee received the assist-.
offices. Second, to insure satisfactory reserves, benefits are ance of the best experts on this question througahout,
not to begin until after the State has required contributions the country. It coordinates the efforts 'to lessen the major
to be collected for 2 years. Third, the funds must be used hazards of our civilization. It deals with matters which
only to pay unemployment compensation, The fourth pro- other countries have already dealt with, and from whose
vision is for the protection of the worker, who is ordinarily experience we can be guided. It will not commence with
cut off from benefits where he refuses proffered employ- unwise speed, but rather will be a gradual development, pro-.
ment. it provides that such proffered employment need not ceeding carefully and surely for the goal which is now far'
be accepted where the hours or other conditions of the Job distant.
offered are substantially less attractive than those of similar Further study, beyond that already given would avail us
jobs in the locality, and that the employment is not such little, and the need for delay in this legislation does not
as to necessarily interfere with his union Nafiations. The exist, as the provisions of the measure itself provide for no
fifth requirement is that the State law does not create a hasty action which might have a retarding effect upon re­
system which cannot be amended when experience indicates covery, I trust, therefore, with such reasonable discussion
the need for such amenedment. as may be found necessary, we may Proceed without delay
9272 CONGRESSIONAL RECORD-SENATE JuNE: 14
to the consideration of this bill, with every hope of it~s appeal will amount to $76.92, making an overpayment to the estate
to an expeditious passage. of $133.08. This is one end of the problem. I have worked
Mr. HASTINGS. Mr. President, I do not know whether out the other end of it also.
or not the Senator covered the point I am about to make. But if we take the illustration of a man who begins to pa
as I did not hear the very first part of his discussion; but in the year 1949 and pays for a period of 45 years, we find
I wish to give an illustration and see whether the Senator that his estate is entitled to $1,890, although the amount the
can explain how this situation is to be met: employee has contributed to the fund, with its accumulated
For instance, if a man 50 years of age going into this plan compound Interest, would amount to $3,383.52, showing a
on January 1, 1937, is earning $100 a month and pays in loss to his estate of $1,493.52.
until he is 65 and lives out his expectancy of 12 years, he I invite attention to the fact that this same youth is pe­
will -be entitled under this plan to $17.50 a month, or $210 nalized if he should pay in for 45 years and then die at the age
a year. In 12 years that will amount to something like of 65 in that his estate would receive only $1,890, whereas
$2,500. There will have been paid in by him and for him the amount he has paid in, with accumulated interest, would
during that time $24 for the first, second, and third years, be $3,383.53, a difference of $1,493.52; so if he lives to be 77
and $36 for the next 2 years, making $144. If that $144 were and draws his pension he has a loss of $2,124, while If he
invested in an annuity, as is the plan here, it would earn him dies at 65 before beginning to draw his pension, his estate is
only $1.17 a month, something like $14 a year, or a total of out $1,493.52.
$168 during the 12 years as against twenty-five hundred and Mr. President, in my own time I propose to discuss the dis­
some odd dollars he would get -under the plan proposed by crimination at some length, and if I have time and the chair­
the bill. It costs for that particular individual something man of the committee does not hurry me too much, I desire
over $2,300. to point out several other discriminations. I wish the Sena­
In view of the fact that this plan contemplates that the tor from Mississippi to understand-and I know he does un­
taxes collected shall pay all the expenses, I ask the Senator derstand-that I shall do so for no other purpose than to
to explain-and I am not asking this question for any other present to the Senate and to the country the facts with re­
purpose than to have the explanation from the chairman spect to the matter.
of the committee-I should like to have the chairman of the Mr. FLETCHER. Mr. President, will the Senator yield?
committee explain to the Senate how this difference of $2,300 Mr. HARRISON. I yield.
in that particular class is made up. Mr. FLETCHER. I ask the Senator from Delaware if he
Mr. HARRISON. I may say here to the Senator from has separated the amount paid in by the insured from the
Delaware that, without question, under the plan favored accumulated interest? He mentioned the two together. I
treatment is accorded to those who are now of advanced think it is important to separate the accumulated interest
yearsm ATNS from the total amount paid in.
Mr.HSIG. Let me give the Senator another illus- Mr. HASTINGS. I have based all the figures I am using
tration, in order to show that, from the point of view of some upon the figures which it is contemplated the Government
persons, there must be discriminations existing in this bill, uses under the plan. The theory of the Government under
That is one of the objections I have to it. If we take a this plan is that the amounts paid in plus 3-percent interest
young man who enters employment in 1949, when the full will take care of the whole plan. The point I make is that
tax of 6 percent is payable and he pays in for a period of in order for that to be true-and I expect to show that it Is
45 years he will have earned during that time $54,000, and not true in fact-we must discriminate between the young
under the plan will be entitled to $53.75 a month, or $645 man of today and the old man of today and give the older
a year. If he should live out his expectancy, he would have man a great advantage. My theory is that in the later years
paid to him under the plan $7,740; while if the same young the Young man who participates in this plan, when he, too,
man had paid in the same amount under some regular an- grows to be old, will call upon the Congress to make up to
nuity plan, from which he got all the benefits, he would be him in 1980 that which has been taken from him in order
entitled under the ordinary plan which the insurance corn- to take care of sbme older .. an who lived in the year 1940.
panies adopt-and this is figured out carefully-to $68.50 I merely desired to call this point to the attention of the
a month, or $322 a year, which over a 12-year period would Senator, so that before he concludes, if he so desires, he may
make a payment to him of $9,864. As under the plan pro- discuss ItL
posed by the bill, he will get only $7,740; he will, therefore, Mr. HARRISON. Of course, the Senator from Delaware
lose $2,124. Of course, I am not asking the Senator to do need not suggest to me that I have any doubt about the sin­
anything more than assume that my figures are correct. I cerity of his opinion. In the first place, I never question the
have gone over them with some care. motives of the sincerity of any Member of this body. I do
Mr. HARRISON. Are the figures based on the 3 percent not know of any member of the committee who attended
the employer pays? more regularly and more diligently performed his duties In
Mr. HASTINGS. Yes; on the 3 percent the employer pays connection with the consideration of this measure than did
and the 3 percent the employee pays. If that fund were the Senator from Delaware.
paid in, as is done in the case of many of the corporations It is natural that there should be a difference of opinion
of the country-unfortunately by not enough of them-and and different interpretations of the bill. There is no differ­
an insurance policy taken out for that man, and he should ence as to this particular matter between the Senator from
start to work at 20 and should work for 45 years and should Delaware and myself when it comes to the fundamental
make his full pay every month, he would be entitled at the facts. It is quite true that when the bill shall go into effect
end of the 45-year period, when he reached 65, to have paid as a law, those persons of advanced age will be favored.
to him $68.50 a month; and, if he lived out his expectancy, However, as suggested by the Senator from Illinois, this Is
$9,864, while under this plan he would lose $2,124. not an investment plan. It is a plan which is worked out
I cite those two extreme illustrations-the first one I gave, for security in the years to come. We are trying to be of
and the second-in order that the Senate may know that the help to people in their old age. I cannot believe that those
way the difference in favor of the elder main Is made up is of the younger generation, who are to realize in later years
by punishing the youth of the Nation. In this connection under the plan, will begrudge the possible advantage to those
I might call attention to the fact that the same thing is true men who'now have reached 55 or 60 years of age.
with respect to the Provision for death benefits. Mr. JOHNSON. Mr. President-
If a man enters the plan at the age of 60 years and earns The PRESIDING OFFICER (Mr. MURRA in the chair)
$1,200 a year for 5 Years, at the end of the fieriod he will Does the Senator from Mississippi yield to the Senator from
have earned a total of $6,000. If he should die just as he California?
reached the age of 65, his estate would be entitled to have Mr. HARRISON. Certainly.
paid to It a lump sumn of $210. The amount this particular Mr. JOHNSON. I should like to inquire whether or not
man has paid In, plus the accumulated interest at 3 percent, the Senator from Mississippi and the Senator from Dela­
 1935 CONGRESSIONAL RECORD-SENATE 9273
'ware have discussed the constitutionality of the pending' Mr. HARRISON. I may say to the Senator from North
measure? [Laughter.] Dakota that the issue which was more sharply contested be­
Mr. HARRISON. Mr. President, I do not want to have fore the committee than any other was that of permitting
any bill passed that cannot be upheld by the Supreme Court. private pension plans to continue and be excepted from the
I say nothing against the Supreme Court. We have done plan outlined in the bill. The thought of some of the best
everything we could to eliminate questionable matters of lawyers was submitted on it; and they thought we would be
constitutionality. We had before us a representative of the taking a very doubtful position if we permitted some comn­
Department of Justice with instructions that he should panies to carry on their private plans and be exempt from
study the bill from every angle. There was assigned to this the tax and at the same time imposed this tax on others.
work in the Department of Justice one of the assistants to We were informed that there is no pension plan In operation
the Attorney General, who is a most highly respected man by any private institution at the present time which Is more
and a really great lawyer. The views of the Department favorable than the one we are here offering.
through this man and others whose views we have received Mr. WAGNER. Mr. President, I desire to say that there
are that the bill will be upheld by the Court on all consti- is nothing in the proposed legislation which would prevent
tutional questions, an employer, if he desired to do so. from supplementing the
Mr. JOHNSON. Mr. President- amount of pension paid under this system by having a pen­
Mr. LA FOLLETTE. Mr. President, before the constitu- sion system of his own to add to that provided under the
tional question gets much farther away from the suggestion proposed legislation.
of the Senator from Delaware I should like to make a sug- Mr. FRAZIER. I assumed, of course, that was the situa­
gestion or two. tion.
Mr. JOHNSON. Let met say that the query I put to the
Senator from Mississippi was more rhetorical or intended to
be more facetious than otherwise, because long ago in my
experience, the first I had in government, I learned that
whenever there is any progress to be made, whenever we
touch the human equation, whenever we seek to aid those
who are in distress and those who require sympathetic
treatment on the part of the Government, always there
arises the bogey man of unconstitutionality.
Mr. LA FOLLETrE. Mr. President-
Mr. HARRISON. I yield to the Senator from Wisconsin.
Mr. LA FOLLETTE. I think the Senator has completely
answered the suggestion of the Senator from Delaware, but
I did want to add one or two suggestions if he will permit.
In the first place, the shedding of tears about the burdens
placed upon the youth under this plan would be viewed
with less sympathy if we should stop to think that without
this plan and, except for this extraordinary emergency, the
youth of the Nation would be. as usually they now are, called
upon to meet, without any assistance, the burden of the
aged dependent.
In the second place, the Senator from Delaware lumps in
the contributions made by the employer in arriving at this
apparent differentiation between the treatment of the
younger group and those who are in the older groups at the
time the system shall go into operation. I see no reason in
the world, if the plan is to be agreed to at all, why we should
not requlre the employer to help take care of the aged in his
employ for whom he has made in the past no provision
whatsoever.
In that connection I desire to point out that, as a matter
of fact, if we separate the contributions of the employee
and the employer, we find in every instance, whether they
be aged or in the younger group, that when they become eli­
gible for annulties under the proposed plan they will receive
more than they themselves will have contributed.
Mr. McNXRY. Mr. President, will the Senator from Mis­
sissippi yield?
Mr. HARRISON. Certainly.
Mr. McNARY. In the Senator's very able presentation of
the bill he stated somewhere in his remarks that those over
76 years of age constitute 7,500.000 of our population. I
think the Senator must have meant 65 years of age.
Mr. HARRISON. Yes; I meant over 65 years of age. If I
said 76, I was in error.
Mr. FRAZIER. Mr. President. I should like to ask the
chairman of the committee a question, if I may.
I have bad some inquiries from men working for corpo­
rations that have pension plans of some kind. They wished
to know if an exemption could be made whereby their comn­
pany would give them a larger pension under the plan they
are now working under, and under which they have been
paying for a number of years, than would he given under
the plan offered here.
I should like to kncw whether that matter has been
considered by the committee
9282 CONGRESSIONAL RECORD-SENATE JUNE 14

SOCIAL SECUR=T
The Senate resumed the consideration of the bill (H. R.
7260) to provide for the general welfare by establishing a
system of Federal old-age benefits, and by enabling the sev­
eral States to make more adequate provision for aged per­
sons, dependent and crippled children, maternal and child
welfare, public health, and the administration of their unem­
ployment compensation laws; to establish a Social Security
Board; to raise revenue; and for other purposes.
Mr. WAGNER obtained the floor.
Mr. BARKLEY. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the rolL.
The legislative clerk called the roll, and the following
Senators answered to their names:
Adame Bulow Coumens Guffey
Ashurst Burke Davis Hai&
Austin Byrd Dickinson Harrisola
Bhmn Byrnes Donahey nesting
Bailey Capper Dutfy Estcb
Rankhee Caraway Fletcher Hayden
Barkley Chavez Prazler Johnonc
Black Clark George Keyes
BODO Connally Gerry King
Borak Coolldge Gibson La4Follette
Brown Copeland Glass LevIk
Bulkley Costigan, Gore Lon-rgan
 1935 CONGRESSIONAL RECORD-SENATE 9283
Long Murray Reynolds Trammell of depression, I introduced in 1930 and 1931 the first two
McAdoo Neely Russeli Vandenberg measures designed to promote Federal encouragement Of
Mccarran Norbeck Schall Van Nuysa
McGill Norris Schwellenbach Wagner unemployment insurance laws in the several States Con­
McKellar Nye Sheppard Walsh tamning essentially the sgame idea which has crystallized In
McNary 0'Mahoney Shlpstead Wheeler
Maloney Overton Smith White the present bill, they were promptly buried In committee.
Minton Pittman Steiwer Then I introduced the first resolution calling for a special
Moore Pope Thomas. OkiS. senatorial investigation of the whole problem of unemploy­
Murphy Radcliffe Townsend menit insurance. Pursuant to it, a committee of three
The PRESIDING OFFICER. Eighty-five Senators having Senators held protracted hearings. The majority members
answered to their names, a quorum is present. wrote a report deprecating the potentialities of Federal
Mr. WAGNER. Mr. President, the senior Senator from action: and I filed a minority report again urging immedi­
Mississippi [Mr. HARRISON] has given the Senate so comp're- ate legislation along the lines of the measure now before the
hensive an explanatory statement regarding the pending bill Senate. It is gratifying to note that many Senators who
that I can add little. But as the sponsor of the measure, and were doubtful of the wisdom of this type of social legislation
as a long-time advocate of social insurance. I ask that the a few years ago are now its stanch and hearty advocates.
Senate bear with indulgence my remarks upon the subject. When future historians of the gilded age from which we
ECONOMIC INSECURITY AS AN INDICTMENT OF AMERICA have emerged seek a moral to adorn their story, they Will
Mr. President, social insecurity in its modern aspects has find that social injustice brought the retribution of sure de­
not been an offshoot of the depression. It has been a per- cline. The income of the masses, shriveled by the blight of
sistent problem since the dawn of the factory era, intensified wide spread unemployment and uncompensated old age, was
by the increasing urbanization of American life and by the not sufficient to buy the goods flowing from the ever expand­
virtual disappearance of free farm lands in the West. ing factories. The huge profits of the few, which could not
To grasp the full ethical and economic implications of this be spent in self indulgence, were reinvested again and again
problem, we must indulge in a brief survey of our history in plants and machines. When the market became flooded
since the Civil War. During that time our energy and genius with unsold surpluses, the depression came with the certainty
built upon this continent a Nation of unparalleled economic of nightfall.
strength. Our mechanical equipment became the most ex- From that emergency we have been rescued by a program
tensive and the most efficient in the world. Our fabulous combining constructive action with enduring faith in the
resources seemed to insure us against the possibility of ad- essential fortitude and strength of the American character.
versity. Our wealth doubled and redoubled until it exceeded We now seek a new era of well being in which the social in­
the wildest flights of fancy. No accomplishment seemed too equalities of the past will be driven forever from the scene.
great for us to attain. We became at once the envy and the We seek a more even tempered and widely diffused economice
admiration of the universe, and a shining example for the enjoyment that will provide a bulwark against the resurgence
ages yet to come. of hard times. The social-security bill draws its inspiration
If some prophet of old could have foreseen the material from both of these objectives. It is a compound in which
wealth with which we were to be blessed, what else might he are blended elements of economic wisdom and of social
have prophesied? He would have envisaged the worker lib- justice.
erated from the nerve-racking struggle for bread alone, UNEMdPOYMENT INSURANCE LZQISLATIW PHASE
secure against the peril of unemployment, enjoying opportu- At the very hub of social security is the right to have a Job.
nities to work under conditions calling forth creative intelln- Even in the care-free decade of the nineteen twenties, an
gence, and enjoying ample leisure for the cultivation of average of 1,500,000 workers per year were care-worn and
family life and the enrichment of spiritual outlook. He tormented by the visitation of unemployment. Between 1922
would have seen the man who has become too old to work and 1933, 15 percent of our total man power remained idle
spending his declining days in mellow comfort, tasting and disdained. When 15,000,000 people walked the streets of
neither the humiliation of charity nor the bitterness of un- despair in early 1933, we knew at last that the fail and rise
requited efforts. He would have been sure that little children of our national prosperity kept pace with the rise and fall of
would be spared the gnawing hunger of poverty, and that unemployment; and we knew that tuntil we solved this baf­
society would recognize in full its obligation to care for the fling enigma, our bravest and sincerest efforts would spend
fatherless and the maimed, themselves in vain.
But if this prophet had awakened during the period be- There is no quick relief for unemployment that has reached
tween 1922 and 1929, which was regarded as the era of its zenith, any more than there is a sure cure during the last
unmatched prosperity, what a rude disillusioniment would stages of a malignant disease. But the common experience
have been his. Three million unemployed, deprived even of many progressive countries has revealed a relatively hu­
during so-called " good times " of the sacred human right mane and economical method of alleviating the sporadic or
to earn their bread, were being fed upon dogma about self- seasonal unemployment which occurs even during normal
reliance and individual thrift. Fully 20,000,000 families times. And in'addition to its curative aspects, it Is a method
were living in the cold cellars of poverty dug- beneath the which serves as a check upon fimther unemployment. Need­
streets of our most prosperous cities. Countless old people less to say, this remedy is unemployment insurance.
were being buff eted from pillar to post, forced at best to There are many reasons why unemployment insurance in
rely upon the help of younger relatives whose own slender the United States should be developed along State lines. The
resources were scarcely equal to the task. Children without tremendous expanses of our territory and the infinite Va­
end were being denied the simple joys of carefree childhood, riety of our industrial enterprises create totally dissimliLar
their minds handicapped by improper schooling, their bodies conditions in different parts of the country. Besides, it
stunted b5 the relentless pressure of factory work. Misery would be unwise to fit an inflexible strait-jacket upon the
and destitution were the sordid realities of every Main entire Nation without testing by comparison in operation the
Street, not in a poverty stricken country, but in a land two or three major proposals for unemployment insurance.
where the inequitable distribution of tremendous wealth was each of which has elements of merit urged by divergent
sharpening the tragic contrast between the House of Have schools of reputable thought.
and the House of Want. At the same time, the disheartening results of 50 years of
Some people there were, it is true, who saw the solemn agitation for unemployment insurance prove conclusively
tragedies lying beneath the gilded surface of our national that there Will be no substantial action unless the Federal
life. But their protests were Ignored and their warnings Government plays its part. Less than one-half of 1 percent
were derided, As early as 1928 I had the bitter experience of the workers In this country are covered by the much..
of encountering the public apathy which greeted my pro- heralded private and voluntary plans for their protection.
posals for a survey of unemployment, for the creation of a And so paralyzing has been the fear of unfair competition by
Nation-wide Job exchange system, and for the inauguration backward States that only Wisconsin dared to proceed In
of a long-range public-works program. After the onslaugh~t splendid Isolation by enacting an unemployment-Insurance
9284 CONGRESSIONAL RECORD-SENATE JuNE 14
law. The very fact that four other States have taken the his State contribution because of his good employment
same course in the short period of time since tihe inception record, he may offset against his Federal tax not only the
of this measure is the best token of the validity, of Federal amount of his actual payment under the State law but also
encouragement. the amount of the reduction that he has won. For other­
The social-security bill sets up two powerful Federal in- wise he would not benefit in the slightest by securing such a
centives to State action. In the first place, it appropriates reduction. This special allowance is designated in the bill asi
$4,000,000 for the fiscal year beginning this June, and author- an " additional credit."
izes the appropriation of $49,000,000 for each succeeding At the same time it should be. noted that the bill takes'
Year, to be allocated among the States in the form of sub- great pains to prevent any State from circumventing the law
sidies for the administration of such unemployment-insur- by allowing employers such reductions In their contributions,
ance laws as they may enact. These subsidies will be on the as would enable them to recapture the Federal tax without
basis of need, taking due account of the population of the setting up adequate safeguards against unemployment.
respective States, the number of persons covered by their Thus it is provided- that a taxpayer who is contributing
unemployment-insurance laws, and other relevant factors. to a State-wide pooled fund shall receive an " additional
As a second incentive to State action, the bill imposes a credit " from the Federal Government only if the State re­
Federal excise tax upon the total pay roll of each employer duction that he has won is based upon his comparativeWy
engaging four or more workers. This tax is fixed at 1 per- good record during at least 3 years of actual compensation
cent for 1936, 2 percent for 1937, and 3 percent for each suc- experience. Let us now suppose that a taxpayer is subject.
ceeding year. Against this imposition any employer may to a State law under which he guarantees to maintain the
offset, up to 90 percent, whatever sums he contributes to employment of a designated group of workers and contributes
pulsory unemployment-insurance funds created under the to a segregated guaranteed employment fund to cover
State law. Since the States will be anxious to draw this breaches in his guaranty. In such case he would be allowed
Federal tax back into their own borders, the natural result an " additional credit " only if his guaranty had been per­
will be the enactment of unemployment-insurance laws ini fectly fulfilled in the past and if his guaranteed employment
every State. account amounts to at least 71V2 percent of the pay roll that
Practically no restrictions are placed upon the types of it protects. Finally, if a taxpayer is participating in a State,
statutes that the States may enact. They may provide system whereby each employer maintains an isolated reserve
for State-wide pooled funds or for individual company re- account for his own workers, his enjoyment of " additional
serves. They may exact contributions from employers, or credits " from the Federal Government will be hedged in by
from employees, or from both. They may add their own con- safeguards similar to those surrounding guaranteed accounts.
tributions if they desire to de so. The only important re- Added to its salutary effects upon the overt activities of
quirement is that the State law shall be genuinely protective, business men, unemployment insurance will have a stabi­
and that its revenues shall be devoted exclusively to the pay- lizing effect upon industry by providing income In times of
ment of insurance benefits, stress for those consumers who otherwise would be without
UNRMPI.OYMEN4T INSURANCE: ECONOMIC POTENTIALrrIES purchasing power to patronize the markets. By way of illus­
It is obvious that a 3-percent pay-roll tax cannot be a tration, we may examine the likely effects had the present
panacea for a burden of unemployment such as we have bill become law in 1922. The 3-percent tax upon pay rolls,
borne in the past. As contemplated in the present bill, its even if we assume, contrary to my own firm opinion, that an
protective features would extend to only 24,000,000 people unemployment-Insurance system might not have checked
out of 48,000,000 gainfully employed. At best it would pro- the business decline In the slightest, would have provided
vide, after a waiting period of 4 weeks, 15 weeks of benefit $10,000,000,000 for unemployment relief between 1922 and
payments to the unemployed, at a rate equal to about 50 per- 1933. It would have provided an accumulative reserve of
cent of the working wage, but in no case more than $15. $2,000,000,000 in 1929. There can be little doubt that the
If the rate of unemployment between 1936 and 1950 should prompt release of this reserve flood of purchasing power
be the same as it was between 1925 and 1934, the total wage would have mitigated and abbreviated the downswing of the
and salary loss in the covered group of workers would be business cycle.
$75,000,000,000, or over six times the sum that would be Contrary to these claims are the arguments advanced from
raised by a 3-percent pay-roll tax. time to time that the taxes Involved in unemployment insur­
But such a simple analysis overlooks both the purpose and ance would curtail the purchasing power of the public dur­
the indirect effects of unemployment insurance. In the first ing prosperous times, and thus provoke the advent of de­
place, It is designed not to supplant, but rather to supple- pressions'. But It should not be overlooked that business
ment the public-works projects which must absorb the bulk regression is encouraged, not by a general collapse of national
of persons who may be disinherited for long periods of time purchasing power, but by an Insufficient dispersion of pur­
by private industry. It is designed to provide for intermit- chasing power among masses of wage earners. A pay rofl
tent, short term unemployment, a remedy that is more tax upon employers alone would intensify this maldistrlbu­
dignified, more humane, more certain, and more economical tion only upon the assumption that the tax would be shifted
than emergency relief, with Its inflated ballyhoo and its de- entirely to wage earners by means of lower wages or higher
fiating effect upon the moral stamina of the recipients, prices or both. To my mind such an assumption is based
More important, unemployment insurance will serve a pre- upon an overmechanical concept of economic forces. It
ventive as well as an ameliorative function. The mere focus accepts bodily the wage fund theory of the classical econo­
of business attentiveness upon the problems of the jobless mists that real wages can be neither raised nor lowered by
will tend to prolong work, just as the study of life insurance legislation. Its logical corollary is laissez faire. In truth,
has tended to increase the length of the average life. The the various factors, including custom, bargaining power, and
drive toward the ultimate goal of a stabilized industry will standards of living, that help to determine wage rates will
be quickened by the Inauguration of a coordinated Nation- not be nullified by the imposition of a pay roll tax. More­
wide campaign against the most demoralizing of all economic over, the several States may add their contributions to Un­
evils. A provision in the present bill requires that the Federal employment insurance by means of the general taxing power,
tax rebate shall be used to encourage a close connection -and thus may exercise their power to redistribute more Justly
between State Job-insurance laws and unemployment-ex- rather than to concentrate income. Even if we assume that
change offices. This Provision emphasizes the fact that the part of the cost of the insurance would be shifted to wage
relief of existent unemployment is but a subordinate phs earners, the temporary reduction in their purchasing Power
of the main task of Providing work for all who are strong would only be a small part of the increased Purchasing Power
a~nd willing. that would be returned to them in benefits when most needed.
The bill provides an even more specific incentive to busi- Nor is there any ground upon which to rest the claim that
ness zen to diminfish the volume of Unemployment. If unemployment insurance, by withdrawing money from cir­
a State- law Permits an employer to reduce the amount of culation. might depress the level of business activitY.. tin­
 1935 CONGRESSIONAL RECORD--SENATE 9M8
employment Insurance funds are not buried under the his application and for any 5 years during the 9 years pre­
ground. The present bill requires that all State funds. In ceding his application. This fusion of Federal and State
order that contributors to them may qualify for Federal responsibilities is along well established lines and has proved
tax rebates, shall be deposited in separate accounts with the uniformly successful in this country.
Secretary of the Treasury. Centralized management of this The claim cannot be sustained that the cost of these pen­
reservoir of purchasing power will have a tremendous sta- sions will be a greater burden than the country should bear.
bilizing effect upon Industrial operations and credit trans- If we assume an average pension of $20 per month for each
actions. In addition, it will obviate the necessity of dump- dependent person, this plan during the first year of its op­
ing Securities upon an overburdened market when hard eration will cost the 48 States only $109,000,000. ranging
times call for the liquidation of unemployment reserves. In- from $11,000,000 in New York to $107,000 in Vermont.
stead, the United States Government will simply take up the During the next 15 years assuming the all-important fact
securities which have been issued to the depositing States. that we enact contemporaneously the Federal old age bene­
Or if the Federal Government has elected to issue non-negoti- fit plan, the grand total of Federal and State expenditures
able obligations, it may pursue the alternative of canceling for pensions will be only $2,445,000,000, or $163,000,000 per
them as they are paidj. year. The high water mark will be about $1,200,000,000 In
OLD AGE DEPENDENCY IN THE UNITEX STATES 1960, and will decline thereafter to a level of about $1,000.-
ParialInscurty
n te pim oflif ishigly rovcatve000,000 per year by 1980. Certainly these are not excessive
ofaroiplet dnependeny in latprieroyiears. Theineeypovdcarie sums for so great a task; In a country as wealthy as ours&
of cmplteindpenencyeas.
ate he eedyoldare In truth, the argument addressed to cost overlooks the
exonerated from the unjust stigma of improvidence by a simple fact that every civilized community does and must
study of income in the United States. It has been revealed supr- t l n eedn epei oewy nti
that during the year 1929 about 6,000,000 families living in country we have been doing it largely by ineffcient relief
dire poverty were able to save nothing. Fifty-nine percent methods, by shabby pension systems, and by imposing bur­
of all American families, who were earning less than $2,000 dens upon millions of younger members of families, with
each, could save only 1.4 percent of their annual Income, consequent impairment of their Industrial elflciency, their
In contrast, a family earning $5,000 saved 17 percent of Its morale, and their own opportunities for future independence.
income, while a family earning between $50,000 and $100,000 Our present method'of dealing with the old is compounding
stored up 44 percent. Viewed In the large, 80 percent of the rate of old age dependency at terrific speed. More sys­
the families in the United States owned only 2 percent of tematic treatment will involve a saving in material expendi­
the savings, while the remaining 20 percent of the families tures, a restoration of national self-esteem, and a salvaging
accounted for 98 percent of the savings, of precious human values,
Even a momentary glimpse at these statistics makes it Fear has been expressed that the enactment of a compre­
abundantly clear why about one-half of the total number hensive system of old age assistance would Increase the
of people in the United States over 65 years of age are de- number of persons upon the pension rolls. Long citations to
pendent. Moreover, the situation is being constantly ag- this effect have been drawn from the experience of foreign
gravated by the lengthening span of the average life, by the countries. But granting the truth of this predict-ion, It Is
general rise In population, and by the technological changes totally irrelevant. We might reduce the number of pen­
driving the elderly worker from the factory. While 0only sioners to zero by abolishing every pension law in every
3,000,000 Inhabitants of this country were more than 65 years State. Of course, the enlargement of pension facilities will
old in 1900, there are about 7,500,000 hin this category today, multiply the number of people receiving aid, just as the ex­
there will be approximately 13,500,000 by 1960, and 19,000,- tension of workmen's compensation laws has increased the
000 by the end of the century. Thus we may expect within volume of relief against accidents. But pensions are no
25 years to be confronted by seven or eight million elderly more the cause for poor people growing old than accident
folk without means of self-support. insurance is the cause for people getting hurt. Pensions
The care of the old cannot be left indefinitely to the miser- do not &eate the evil; they merely recognize it and provide
ably weak pension laws which exist In only 33 States. Due the most effective remedy.
to the unusual difficulties which localities always encounter PE22AHEPT fly : RETREuMEN RENEMIS
when attempting to raise money, and to the general lethargy However, sole reliance upon a system of old age gratuities
which surrounds social legislation until it receives some Fed­
eralimptus
avrag thmonhlypenionundr Satelegis- might provoke unduly large increases In public expenditures.
lation is only $15.50 per month. At the present time, to the Th ost would rise to $2,500,000,000 per year by 1980. The
Nation's shame, every person over 65 years of age upon the proportion of the total population dependent upon such
pension rolls of the States is matched by three people upon assistance would rise from 15 percent in 1936 to 50 per.­
the elif rols.cent in 1957 and remain stable thereafter. For this reason
the relif rofIt it s necessary that the core of old age relief should be not
TZBEPORARY M. IEF OLD hGE PENSIONS gratulties but a systematic and actuarially sound system of
To meet these pressing needs, the social security bill in- earned old age benefits. Such a system, In addition to plac­
augurates a system of Federal subsidies to the States for tag a governor upon general taxation, will provide an In.­
old age pensions. For this purpose, there is appropriated finitely more humane method of dealing with the problem.,
$49,750,000 for the fiscal year 1936, and for each succeeding Security after a life of work should be a matter of right,
year there Is authorized to be appropriated whatever amounts not of charity; it should be a certainty, not a mere ex­
may be necessary to round out the plan. While these grants pectancy.
will be on an equal matching basis, they will in no ease exceed In the long history of agitation for social insurance In
$15 per month per person. This check upon Federal expendi- this country, every proposal for consolidated public respon..
ture will in no wise circumscribe the limits of State ac- sibility has been confronted by the plea that the matter
tivity. Those people who bewail that this bill in practice should be left to the initiative of private enterprise. Thus it
will limit pensions to $30 per month are shedding crocodile is now urged that all businesses possessing private pension
tears, because the average protection afforded today is less systems should be exempted entirely from the provisions of
than half that sum; and because no evidence can be pro- Federal law. The best answer is experience. For a hundred
duced to show that Federal aid will prove an anchor rather years the way ha., been cleared for the development of pri.
than a propeller to progressive State action. vate pension systems. But, aside from the railways, only
While a great degree of flexibility is permitted to State about 2,000,000 people in the United States are within their
pension systems qualifying for Federal assistance, certain purview. In many cases, even where a system exists, Its
fundamental requirements must be observed. Relief must protection Is unfunded and uncertain. it is amazing to note
extend to'every county in the State, nor can it be denied to that only about 4 percent of the workers covered by such
any needy Person who is a citizen of the United States and plans actually draw any benefits upon retirement, A rapid
who has lived In the State for 1Lyear immediately preceding labor turnover, or a dismissal for one Cause or anoth~er, cuta
LXXIX-4-­
9286 CONGRESSIONAL RECORDL-SENATE JUNE 14
short their expectancy before Its maturity. Students of this the States in which they operate. In addition, there are
problem tell us that the encouragement of private pension 300,000 homeless children. 200,000 new delinquents every
systems promotes the antisocial practice of discharging men year, and perhaps 500,000 who are crippled. For all these
in middle age and is closely aflied with the company domi- unfortunate groups, as well as for public health, maternal
nated union. Despite claims to the contrary, no private aid, and the care of the blind, the social security bill makes
system provides certain benefits to the run of average workers modest appropriations along the well developed lines of Fed-
which are superior to those contemplated by the pending bill. eral subsidies to the States. These grants will be extended
But while the Federal plan of old age benefits proposed primarily upon a matching basis in order to stimulate the
under this bill is uniform in its application, there is nothing States to action, but they will take full account of the special
that would prevent any private system which might be more needs of those localities which are genuinely without capacity
liberal in its terms from supplementing the public system. to help themselves.
The accounting problems involved in such adjustments are FneACIAcr ASPCTS
well known and relatively simple. The total cost of all of these minor expenditures for the
The social security bill therefore provides a Federal sYs- next 15 years will be less than $2,000,000,000. I have re-
tem of old age benefits, computed and maintained upon an ferred earlier to the special tax for unemployment insur­
actuarial basis. Beginning January 1, 1942, any employee ance. Aside from old age pensions, which will be supported
will be entitled to retire upon reaching the age of 65 or at by general revenues, the main outgo will be in connection
any time thereafter, and to receive upon retirement monthly with the Federal old age benefits. To cover this, two types
benefit payments from an "old age fund" in the United of taxes are imposed.
States Treasury. These benefits will represent a fixed per- First, every employer is to pay an excise tax upon his
centage of the worker's earnings between January 1, 1937 and total pay roll, but no single salary, will figure in this corn-
the time he reaches the age of 65. They will thus depend putation to an extent greater than $3,000 per year. This
upon his average salary and his period of service subsequent tax will begin- at 1 percent for the calen&.r year 1937, and
to the inception of the system. Special allowances in the will rise by one-half percent every 3 years until it reaches
form of higher rates are to be made for the older workers of its maximum of 3 percent for 1949 and subsequent years.
today, who will retire within a comparatively short period The second tax is to be levied against wages and paid
of time. The plan will cover employees of all grades and by employees, at the same rate and upon the same tern-s as
salaries, but that part of a man's annual income above the the employers' tax. Thus the total burden upon each em-
first $3,000 will be ignored in calculating benefits. ployer will be exactly the same as that imposed upon all
A few simple figures will convey an idea of the amount of his employees.
of protection afforded by this system. In the typical case of The two revenue measures will yield over $15,000,000,000
a man who works 40 years after the passage of the proposed by 1950, while the cost of old age benefits until that time
law, the monthly benefit payment will be $32.50 if his aver- will total only $2,445,000,000. Allowing for interest, the
age salary has been $50, $51.25 if it has been $-00, $61.25 reserve fund will reach $14,000,000,ODO within 15 years.
if it has been $150, and $71.25 if it has been $200. In the _ co~searrunroNw AL
vimYO Taz wZmEuaSzN
event a person dies before attaining the age of 65, or before In examining the constitutionality of this measure we may
receiving in benefits an amount equal to at least 3 3'2percent pass very quickly over the sections which provide for out-
of his earnings between the inception of the system and his right Federal subsidies to the States for old age assistance,
65th birthday, his estate will receive an amount sufficient to for child welfare, for unemployment relief, for public health,
bring his total receipts up to 31/2 percent of such earnings. and for maternal care. Analogous grants have formed a part
The old age fund for the payment of these benefits will of the fabric of our Governnment for half a century. Since
be maintained by annual appropriations beginning with the the Maternity Act of 1921 we. i upheld in the case of Massa­
fiscal year ending June 30. 1937. These appropriations will chusetts against Mellon, found in Two hundred and Sixty-
be based upon actuarial principles and mortality tables, and two United States Reports, page 47, I do not believe that
will bq sufficient to build up an adequate reserve and to pay a -single reputable authority has questioned the plenary
3 percent interest thereon. _power-of Congress to extend such assistance.
Only those who know the frightful social cost of old age Let us turn then to the part of the bill which provides for
dependency will envisage in entirety the human values that Federal benefit payments to employees retiring at the age
wil' be salvaged by the establishment of this system. And it of 65. It is clear that no distinction ever has been, or
must not be overlooked that industry will receive its full logically can be, drawn between. Federal subsidies to the
measure of benefit. The iiicentive to the retirement of States as organic entities and Federal aid to large classes of
superannuated workers will improve efficiency standards, stricken individuals. The test in either case is whether the
will make new places for the strong and eager, and will in- grant is within the authority of Congress to appropriate
crease the productivity of the young by removing from their money.
shoulders the uneven burden of. caring for the old. The Our Constitution provides, in part, that the Congress shall
purchasing power that will result from a flood of benefit have power-
payments, beginning with $52,000,000 in 1942 and rising To lay and collect taxes *to pay the debts and provide
gradually to $3.51 1,000,000 in 1980 will have an incalculable for the common defense and general welfare of the United States.
effect upon the maintenance of industrial stability. It is now generally agreed that this general welfare clause
VOLUNTARY ANNUTISis a restriction upon the power to tax rather than An inde-
To provide opportunities for self-protection to persons of pendent grant of legislative authority. But It has been
modest means who are excluded from the provisions of the equally clear for at least 75 years that the power to tax is
Federal benefit plan, and who do not wanV to rely upon the coextensive with the power to spend; and that both, far from
gratuiitous pensions, the bill contemplates the sale of an- being circumscribed by the enumerated powers of Congress,
nuity bonds by the Federal G'overnment. These shall have extend to every tender solicitude for the general welfare.
a maturity value not in excess of $100. Hundreds of illustrations come readily to mind where un-
PROTECTION OF THE YOUNG._THE MAIMED, AND THE SIC3C challenged expenditures of Congress have been far more
Certainly the depression that has affected the strong could tenuously linked to the general welfare than those contem­
not have beeh expected to overlook the weak. Seven million plated by the present bill. Congress has appropriated money
four hundred thousand children under 16 years of age are for the relief of the distressed inhabitants of other lands.
now members of families upon the relief rolls. only 109,000 Can there be less power to ameliorate the wide spread dis-
families in the United States are receiving aid in the form tress of our own people? Congress has devoted funds to the
of mothers' pensions under State laws, while at least 300,000 extinction of the Mediterranean fruit fly. Was that fly a
families are in need of such assistance. These pensions, greater scourge than unemployment? Congress has pro-
where in effect, range as low as $7.29 per month per fain- vided generously for the victims of Mississippi River floods.
fly. and are paid in only one-half of the counties within Are these floods more constant or more dreadful than the
1935 CONGRESSIONAL RECORD--SENATFE 928
advent of uncared for old age? Such comparisons invite no tionallty of the Agricultural Adjustment Act. which went
speculation, much further by directing that the proceeds of the taxes
Having probed the question of appropriations, let us now provided for therein should be devoted to specific purposes
examine the tax sections of the bill. It Is indisputable that elaborated in the same act, was maintained by Judge
the tax imposed upon pay rolls and wages by section 8 is Brewster of the United States District Court for Massa­
a genuine revenue measure. It is calculated to raise $300,- chusetts. In the case of Franklin Process Co. against Hoosac
000,000 during the first year of Its existence, and $2,000,- Mill Corporation, located at page 552 of the eighth volume of
000,000 annually within a dozen years. And when a genuine the Federal Supplement, we read:
revenue measure is In question, the power of Congress to tax 'he act, taken as a whole, leaves no doubt of the legislative
Is practically unrestrained. In Flint against Stone Tracy Co., intent to levy the tax for the purposes of defraying the expenses
reported in Two Hundred and Twenty United States Reports, of administering the act and paying the debts Incurred for bene­
fit payments. I * * If S1 * * It should appear on the faos
Page 107, the Supreme Court said: of the act that It was calculated to benefit only private Interests.
The Constitution contains only two limitations on the right of It would be the duty of the court. I take It, to declare the tax
Congress to levy excise taxes; they must be levied for the public unlawful. It Is not, however, within the province of the court to
welfare and are required to be uniform throughiout the United substitute its judgment for that of Congress upon the effect of &
States, particular measure manifestly designed to promote the general
welfare of the people of the United States. It Is no objectioni thaS
In Brushaber against Union Pacific Railroad, found on individuals Wiul derive profit from the consummation of the
the first page of the Two Hundred and Fortieth volume of legislative policy. Individuals benefit from every bounty. sub­
United States Reports, the highest tribunal added that the sidy, or pension provided for by statute, whether Federal or State.
authority of Congress to tax " is exhaustive and embraces The famous child-labor tax case, embalmed in the Two
every conceivable power of taxation."~ Hundred and Fifty-ninth volume of United States Reports.
The Flint case also brushed aside the argument that an beginning on page 20, has been cited In opposition, but it Is
excise tax might be invalid because it singled out specific not applicable. There the Supreme Court said:
groups and excluded others. It was there said: In the light of aUl these features of the act, a court must be
As to the objection that certain organizations, labor, agricul- blind not to see that the so-called "tax " is Imposed to stop the
tural, and horticultural, fraternal and benevolent societies, loan employment of children within the age limits prescribed. Its
and building associations, and those for religious, charitable, or prohibitory and regulatory effects and purposes are palpable. All
educational purposes, are exempted from the operation of the law, others can see and understand this. How can we properly shut
we find nothing In that to Invalidate the tax As we have had our minds to It? *II So here the so-called "tax"' Is a
frequent occasion to say, the decisions of this Court from an early penalty to coerce the people of a State to act as Congress wishes
date to the present time have emphasized the right of Congress to them to act In respect of a matter completely the business of
select the objects of excise taxation, and within this power to tax the State government under the Federal Constitution.
some and leave others untaxed, must be included the right to make Inmrecotathscileuiybllmrcsnt
exemtios
arefoud suhIntilS
a ~a penalty but a series of genuine tax provisions. Nor does
Viewed in isolation, there can be no doubt that all of the It embrace a single regulatory feature extending within the
excise taxes embodied In the social-security bill are a valid boundaries of the several States, except the regulations in­
exercise of congressional power. The only serious question cidental to the collection of all taxes.
is whether they may be set aside on the ground that their Thie tax embraced in section 9 of the bill Involves exactly
real intent is to stimulate social insurance laws by the sev- the same considerations. Its only additional feature Is the
eral States, or that they form part of a designing Federal rebate allowed to taxpayers who contribute to unemploy­
scheme to invade the provinces reserved for State action. ment insurance funds created under State laws. But this
But no constitutional principle Is more firmly embedded In allowance falls squarely under the protection of Florida
case law than that no concomitant motive will invaildate an against Mellon, as reported in Two Hundred and Seventy-
otherwise valid exercise of the taxing power. In Veazie three 'United States Reports, at~ page 12. There the Federal
Bank against Fenno, reported on page 533 of the eighth vol- estate tax, under the Revenue Act of 1926, allowed an
nine of Wallace, the Supreme Court upheld an act of Congress exemption, up to 80 percent, based upon the taxpayers'
levying a 10 percent tax upon bank notes Issued by State subjection to similar estate taxes under State law. Florida,
banks, although the clear intent and the accomplishment having no such law, claimed the act an unconstitutional
was to drive these notes out of existence. In McCray against discrimination designed to coerce the States to pattern their
United States, One Hundred and Ninety-fifth United States statutes upon the Federal Government's ideal. These Ob­
Reports, page 27, sustaining tax measures discriminating jections were overruled, Mr. Justice Sutherland stating In
against the sale of yellow oleomargarine, Mr. Justice White the opinion of the Supreme Court that-
said: The contention that the Federal tax Is not uniform because
It is self-evIdent that on their face they levy an excise tax. other States Impose Inheritance taxes, while Florida does not, is
That being their necessary scope and operation, It follows that without merit. Congress cannot accommodate its legislation to
the acts are within the grant of Federal power, the conflicting or dissimilar laws of the several States nor control
the diverse conditions to he found In the various States which
The most persuasive opinion, however, is contained in the necessarily work unlike results from the enforcement of the same
Two Hundred and Forty-ninth volume of United States Re-. tax. All that the Constitution (art. 1, sec. B. cl. 1) requires is
ports, at page 86. In the case of United States against that the law shall be uniform in the sense that by its provisions
the rule of liability shall be the same in all parts of the United
Doremnus upholding the constitutionality of the Harrison States.
Narcotic Act, the Court said: fet There remains to be considered only the extent to which
An act may not be declared unconstitutIonal because its effc the very recent decision of the Supreme Court in Railroad
may be to accomplish another purpose as well as the raising Of
revenue. If the legislation is within the taxing authority of Con- Retirement Board against the Alton Railroad Co. affects the
gress-that is auffcient to sustain It. Federal old-age benefit system. Insofar as that case went
And further corroboration by Mr. Justice Sutherland, upon the ground that there was no direct relationship be-
writing for the Court, came in Magmanzo Co. v. Hamilton tween the regulation of interstate commerce and the re­
(292 v. c. 40), where It was said: tirement of superannuated workers. it has no ' earing here.
From the beginning of our Government. the courts have sus-Thprsnbilsbaenouontec eepwrbt
tained taxes although imposed with the collateral intent of effect- upon the power to tax and to spend for public purpose&,
Ing ulterior ends which, considered apart, were beyond the con- But it may be argued that the decision in the ARtM case
stitutional power of the lawmakers to realize by legislation di- threatens the present project with extinction under the due-
rectly addressed to their accomplishment, process clause, since it held that the pooled funds arrange.
The further objection may be raised that the excise tax ment embodied in the railroad retirement law violated the
and the income tax levied by section 8 are invalid because fifth amendment. But the Supreme Court In that case was
the measure taken as a whole Indicates rather strongly that tremendously influenced by the specific provisions of the
these taxes may be used to defray the costs of the special particular pooling system under fire, particularly In its ap­
benefits to workers retsrln at the age of 65. While the plication to past periods of serviMe and it is far from cer­
Supreme Court has not decided this question, the constitu- tain that the Court intended to strike down every Con­
 9288 CONGRESSIONAL RECORD-SENATE JuNE 14
gresslonal attempt to spread the Incidence of major indus- tax only on those, wherever they may live, whose wealth
trial risks, is in excess of 100 times the average family fortune. and
It is doubly hard to believe that the Court desired to graduate It from that figure up.
sound the death knell of all forms of social insurance. in In other words, under the amendment, which I hope I
view of its broad language In Malton Timber Co. v. Wash&- may have the support of the Senator from New York in
ington (243 U. S. 219), upholding a State workmen's corn- having adopted, I think we can actually grant the benefits
pensation act, proposed under the bill without imposing burdens upon the
The opinion said: people to whom we are supposed to be giving benefits, by
To the critic!sm that carefully managed plants are In effect levying a graduated tax to be paid only by those whose
required to make good. the losses arising through the negligence fortunes begin at not less than 100 times the average family
of their competitors, It Is sufficient to say that the act recognizes fortune.
that no management, however careful, can afford immunity from
Personal injuries to employees In hazardous occupations, and Mr. WAGNER. Of course, I am not in a position either
prescribes that negligence Is not to be the determinative of the to support or refuse to support the proposed amendment
question of responsibility of the employer or the industry. Taking until I have a chance to read it.
the fact that accidental Injuries are Inevitable. In connection Mr. LONG. I know that.
with the Impossibility of foreseeing when, or In what particular
plant or Industry they will occur, we deem that the State acted Mr. WAGNER. Under the old-age-pension feature of
within its power In declaring that no employer should conduct the bill, the money is to be paid In entirety by the taxpayers
such an Industry, without making fairly apportioned contribu- of the United States and of the States.
tions adequate to maintain a public fund for Indemnifying In­
jured employees and the dependents of those killed. Irrspetive Mr. LONG. I understand. I do not expect the Senator
of the particular plant In which the accident might happen to to commit himself. I know his heart is already open on
occur. this kind of a matter, and Iwant to ask him to keep his
In my opinion, this decision is precisely applicable to old mind open.
age and unemployment insecurity. But Irrespective of the Mr. FLETCHER. Mr. President, will the Senator from
shadows that the Alton case may cast upon the validity of Louisiana permit me to ask the Senator from New York IL
Pooled funds, there is the further consideration that the question?
social-security bill makes no provisions for pooling as that Mr. LONG. I yield.
term has been understood. The old age benefits are Paid. Mr. FLETCHER. There are some organizations, some in­
not from a pool, but from an account fed by appropriations corporations, which are already operating certain pension
from the general f undis of the United States. If this pro- plans of their own. Are they taken into consideration In the
cedure constitutes pooling within the Prohibition of the Alton bill? In other words, will the people who have been for years
case, then it is hard to conceive of a Federal expenditure participating in plans which have been in successful opera­
that would merit the .sanction of the Supreme Court. tion lose all they have been entitled to?
The decision of the Supreme Court in the case of A. L. A. Mr. WAGNER. So far as past acts are concerned, any
Schechter Poultry Corporation against United States invali- potential benefits that have accrued to workers through con­
dating certain features of the National Industrial Recovery tribution by employers or employees, or both, are in no way
A,~ iias no application to the pending bill, which contem- affected by this bill. A~ny worker retiring at any time in the
plates neither delegation of power nor the extension of future may receive in full whatever has been stored up in
Federal authority under the commerce clause, his behalf. The only question is whether employers, by con-
The social-security bill embraces objectives that have tinning their contributions to private systems in the future,
driven their appeal to the conscience and intelligence of the should be allowed to escape the provisions of this bill. I
entire Nation. We must take the old people who have been strongly urge that they should not. These private systems
disinherited by our economic system and make them free are not extensive in the United States, and a study shows
men in fact as well as In name. We must not let misfortune that only about 4 percent of the workers under them actually
twist the lives of the young. We must tear down the house draw benefits. In many cases men are discharged in middle
of misery in which dwell the unemployed. We must remain life and never receive the benefits,
aware that business stability and prosperity ure the f ounda- In addition, the private systems increase the immobility of
tion of all our efforts. In all these things we are united, and the workers. I think a system that makes a man free to
in this unity we shall move forward to an era of greater leave his employment and still enjoy a pension in old age is
security and happiness, preferable to one that glues him to a particular job. But
Mr. LONG. Mr. President, I should like to ask the Senator there is. nothing in the bill that prevents an employer from
from New York a question. being more generous with his workers than the Federal plan
Mr. WAGNER. I yield, requires. He may easily supplement the Federal plan with
Mr. LONG. I understand that, under the proposed plan. one of his own.
If a State put up its $15 per person. the 'United States would Mr. NORRIS. Mr. President, the question of the Senator
contribute its $15, so that the State could pay the person from Florida leads me to ask another question of the Senator
above the specified age $30 a month. from New York, going, I think, a little further along the line
Mr. WAGNER. Mr. President, the Senator from Louisiana of the Senator's question.
[Mr. LoNG] refers only to the old-age-pension feature of the Let us take a concrete case. I understand the Pennsyl­
bill. vania Railroad has a pension system. I do not know any­
Mr. LONG. I understand. The point I wish to make Is thing about its details, but I am assuming that it has been
this. Let us take a State like Mississippi. The taxes of very successful, a system in which the employees contribute
the State of Mississippi are already so high that half the a portion of the funds from which the employees receive pen­
property in that State was advertised for sae at a tax Wae sions after retirement.
a year or so ago. If they should meet the requirements of If a man had been an employee of the Pennsylvania Rail.
the $15 to every person within the pensionable age it would road for 25 or 30 years at the time this proposed law went
require taxes for pensions alone in that State in excess of into effect, he would have a very considerable interest in that
the total taxes now collected by the State of Mississippi, and pension system. What effect would the enactment of this
that is only a small Part of the bill, as the Senator says, measure have on that man and on that system?
I shall propose an amendment to the bill, on Monday, per- Mr. WAGNER. There is no absolute obligation that the
haps-I hope to have it looked over by that time by some railroad pay the 'pension. It is a pure gratuity. and the
Parties whom I wish to consult-so that these benefits may promise may be revoked before fulfillment.
be paid without taxing any laboring man. without taxing Mr. NORRIS. Then perhaps we ought to take an example
any poor man, without a State having to tax Its property, a little different from that. As I have said, I am not familia
I will propose that the Federal Government Shall furnish with this pension matter, but I should like to ask the Sena­
the States the money with which to pay the old-age pen- tor this question. Under some of the systems where the
filons, and other things of the kind, by levying a graduated employer has been contributing, as well as the employee,
 1935 CONGRESSIONAL RECORD--SEN~ATE 9289
where the employee has been contributing for a number of I should hate to have the system Injure other systenMB som11
years, and old age is about to come upon him, and he has a of which, In years past, have done a magnificent work.
direct interest in the fund, what is going to happen to him? Mr. WAGNER. I do not see how this plan can possibly
Mr. WAGNER. There is nothing to Interfere with an injure or interfere with what these private systems ha&ve
employer paying at any time in the future whatever pen- done, or with money already paid in to pay future benefits.
sions have accrued due to action already undertaken. And These benefits may still be paid. There are bound to be
as to future undertakings, he has a perfect right to supple- some minor difficulties of adjustment, just as there were in
ment whatever money may come out of the Federal pension relation to the workmen's compensation laws. At the time6
funds. they were adopted there were some States where workers
Mr. NORRIS. Let us take a concrete case. The proposed were paid greater compensation for Injuries under the Pri­
law would provide for levying a tax on both the employer vate plans than were provided by the new laws. But in
and the employee, running ultimately to 3 percent. Under order to protect all the other workers, it was necessary to
the old system, we will assume, it was something different, pass mandatory legislation.
Mr. WAGNER. The employee has no assurance under the Mr. HARRISON. Mr. President, I ask unanimous consent
old system. that there be inserted in the rECORD at this point a very
Mr. NORRIS. I know he has no assurance, but even if illuminating article written by Mr. Edwin E. Witte, execil­
he has no assurance, it has been operating for a good many tive director Committee on Economic Security, on the ques.­
years, a great many people are getting benefits from it, and tion of private pension Plans.
no one would want to destroy it if it is possible to avoid it. The PRESIDING OFFICER. Without objection, it is so
What would happen in that kind of a case? ordered.
Mr. WAGNER. In the first place these voluntary, associa- The article referred to is as follows:
tions are not as widespread as the Senator assumes. Sow REAsoNs WHY EmpLoYERs MAzNTAzNZNa INDUsTRIAL EZTD3Z­
Mr. NORRIS. That may be true. I am asking the ques- WxENT SYSTEMS SnOUiLD NOr BE EXEMPTED Fiox1 Tuz TAx Imposm
tion, I may say to the Senator, not as a critic: I am as much IN TITLE VIII or THE SOCIAL SEcuarrY Acz
in favor of the proposed legislation as the Senator is. How- (By Edwin E. Witte, executive director Committee on Economicl
ever, I do not want to do any harm to any other system, I. RELATIVELY FEW EXISTING Security,. June 13 1935)
PRIVATE INDUSTRIAL RETIREMENT SYSTEMS
which may involve both the employer and employee, since GIVE AS ADEQUATE PROTECTION TO THE EMPLOYEES THEY INCLUDS AS
they have invested money in a fund or something of the THEY WILL. R1C5VE UNDER TITLE II OF THE SOCIAL SECURITY ACT
kind, which would make it unfair, for instance, to levy an Up-to-date Information regarding Industrial pension plans Is very
additional tax upon those people. scant. The exhaustive study by Murray W. Latimer, Industrial
Mr. WAGNER. There is no additional tax, because these estory
Pensions Systems in the United States
down only to the early months and Canada, brings the
of 1932. Since then there has
taxes operate only in the future. The employer is at liberty been a considerable increase in the number of group annuity
not to continue his private contributions in the future. policies issued by Insurance companies; and despite some abandon­
Nothing destroys what he has done in the past, or prevents donments, some Increases In the total number of industrial pen­
sion plans. In May 1932 there were, according to Latimer. 434
the employees from reaping the benefits of what he has industrial pension plans, exclusive of railroad comnpanies. Firms
done. All this bill provides is that, as to the future, the having such plans employed approximately 2.000,000 employees.
worker will have the absolutely sure protection of a public Mr. Forster testified in the Senate hearings on the Social Security
Act that there are now in the neighborhood of 600 Industrial pen-
systemSion plans applicable to a total of be~tween two and three million
Mr. NORRIS. I see that, employees. Three hundred of these plans involve Insurance
Mr. WAGNER. Whereas under these private systems the through Insurance companies, and, according to Mr. Forster these
workr
upn
upn aadpend
workr dpend
eremattr
eremattr oo genrosty.plans
genrosty.the apply to 1.000.000
Equitable employees.
Life Assurance The which
Society, Information furnished
is included by
In the
Mr. NORRIS. I understand that. Senate hearings on page '725. agrees fairly well with this estimate
Mr. WAGNER. If the firm fails, the employee loses his of Mr. Forster's as to the number of group annuity plans which
pension. ar nue hog nuac companies, reporting that. there
Mr. NORRIS. That Is true. of employees reported covered, however, was very much smaller
Mr. WAGNER. But there is nothing to interfere with an than estimated by Mr. Forster, being only 290.000.
employer who may desire to be more generous than the law. The 600. or thereabouts, pension plans now In operation difer
Mr. NORRIS. I understand that, greatly as to their provisions. The following general statements,
however, are believed to accurately sumnmarize, iLa general terms
Mr. WAGNER. That is all that happens. some of the principal featuras of these plans:
Mr. NORRIS. That does not answer the question, if the 1. Many Industrial pension plans have no reserves whatsoever,
Senator will allow me to say so, in the particular case I cited, or only very Inadequate reserves. This statement does not apply
Mr. WAGNER. There is nothing to destroy such a system to the 325 plans which are Insured through the Insurance com.­
asums,
as te Snatr xcet tht i th fuuretheem-panies, and also does not apply to some of the noninsured plans.
as
asums,
te Snatr xcet tht i th fuuretheem-While the Insured plans are one-half of the total number. they
player and the employee are taxed to help finance the public have only about one-tenth of the employees covered In Industrial
system. pension plans.
Mr. NORRIS. I hope there is nothing to destroy it, but if Sion 2. The benefits payable under a majority of the Industrial pen-
plans are less than those to which employees will become
they are paying under a system which has been in operation entitled under title II of the Social Security Act. Under title IM
for years, and then they are called upon to pay into this sy's- the annuity rate Is one-half of I percent per month (6 percent
tem in addition to that, It might mean a burden which would per year) of the first $3,000 of the earnings of the employee dur­
be unair.ing his Industrial lifetime; one-twelfth of 1 percent per month
be unair.(I percent per year) of the earnings between $3,000 and $45,000.
Mr. WAGNER. The Senator refers to the employee? and one twenty-fourth of 1 percent per month (one-half of I per­
Mr. NORRIS. And the employer, cent per year) of the earnings In excess of $45,000. In practically
Mr. WAGNER. There is no double payment, because the all cases this figures out as an annual annuity of at least I %
employer can wind up the old system. As to what has already perceto" h mlyesttlerig.Ltie' td fmr
than 400 Industrial pension plans In 1932 revealed that the ma­
been paid under it, the worker has a vested right to what- jority of these plans provide for an annuity (annual) of 1 percent
ever contributions he has made. He does not lose that money, per year, and only 25 percent have an annuity rate okf above 1%
Mr. NORRIS. If he had such a vested right, he would not percent.
getit
bll;he
nde thsoul ge Itas materof aw. 3. Few, If any, of the existing industrial pension planst make
get t uderthisbil;
h wold gt i asa materof aw.any provisions for the transfer of credits when an employee leaves
There may be some systems under which he would not. employment to take work elsewhere. The most liberal of the plans
Mr. WAGNER. An effort will be made upon this floor to provides that this employee shall In such a case get back the
perpetuate Private systems in the future; but I think it i~s money- he personally contributed: in no case does the employee
ver~ndesrabl
thigget all of the contributions standing to his credit unless he re­
a verthn undsirabe mains with the company until age of retirement.
Mi. NORRIS. r think I agree with the Senator. I do 4. Practically all industrial pension plans provide for payment of
not want to do anything to interfere with the operation Of annuity benefits only to employees who remain in employment
thismeasrewhich It th~nk is one of the most forward steps until they reach the retirement age (with the variation that many
this masureplans provide for payment of death benefits to the estates of' em­
we have taken In a great, maw y ears,, but, at the same tiML, plo~ee who die before reaching the-retrement age). Fully one.
9290 CONGRESSIONAL RECORD-SENATE JuNE 14
half of all industrial employees lose their jobs or retire voluntarily relatively smail total earnings. This gives an advantage to the
before they reach age 65. Under the existing Industrial pension employees who make contributions for a relatively short time-
plans such employees who quit work or voluntarily retire before that Is, to the workers who are now half old. If one of the pro­
they reach the retirement age get no benefits at all, except for posed exemption amendments is adopted and Individual em­
the rate. In some cases, of the money they themselves have con- ployees are allowed to choose which plan they prefer, It is very
tributed. natural that the older employees will be the ones who are brought
5. Myost of the Industrial pension plans can be discontinued at under the Social Security Act. These employees will get a dis­
the option of the employer. This applies particularly to uninsured proportionate share of the benefits and the employers who have
plans, which almost invariably are noncontractual. It Is well- the Industrial pension plans will thereby escape a part of the
settled law that employees have no redress when employers dis- liability which they ought to help to bear.
continue or modify Industrial pension plans, even if they have VI. EMPLOYERS WILL GAIN NOTHING THROUGH EXEMPTION, EXCEPT IN­
already been retired on a pension. SOFAR AS THEY ARE ABLE TO TRANSFER THE BURDEN OF PROVIDING
In. THERE IS NOTHING IN THE SOCIAL SECURITY ACT (AS A MATTER OF PENSIONS FOR THEIR OLDER EMPLOYEES TO THE NATIONAL FUND
LAW) WHICH WILL COMPEL ANY EXISTING PLAN TO SE DISCONTINUED Under existing plans which sre at all adequate the rate of con­
OR WHICH WILL IN ANY MANNER AFFECT THE RETIREMENT ALLOW- tributions required from employers ts at least 3 percent. This Is
ANCES OF EMPLOYEES ALREADY PENSIONED the maximum rate that employers wilU have to pay under the
The question at issue is one of tax exemption, not Of the right Social Security Act, and that rate will not apply until 1949.
to continue industrial pension plans. The Social Security Act does The only way that employers can gain through exemption Is
not outlaw industrial pension plans or regulate them in any man- through having only their younger employees In the Industrial
ner. Employers may feel that they cannot pay the taxes Imposed pension plans while the older workers are within the national
In title VIII and also continue their industrial pension plans, but system. Through such a method employers can pay higher bene­
they are not prevented from doing so. fits to their younger workers because they escape the accrued
With regard to employees already retired, not only is there liability for their older employees. As noted previously, however,
nothing in the bill which would require employers to discontinue this Is at the expense of other employers who operate without an
or modi~fy the pension grants already made, but it would be out- exemption.
r-ageous for them to use this bill as an excuse for doing so. Under V11. EXEMPTION OF INDUSThIAL PENSION PLANS L.EAvES THE DOOR OpEN
a proper industrial pension plan reserves have been created for TO GRAVE ABUSES OF EMPLOYMENT POLICIES
the payment of the pensions to people who have been retired. Weeepoeshv rvt nutilpninpaste a
Under most of the existing plans the employers can discontinue Wreatyredueplyr
the v privatesuc Ilndsthrialhpensonplayns theywa
a
the
ny ensonsatbu
ime iftheyusetheSocal ecuityActworkers of middle age or older as possible. The labor unions have
as an excuse for doing so they are exhibiting gross bad faith, often claimed that this is a policy of many of the firms which
inI. WHETHER OR NOT EMPLOYEES ARE EXEMPTED FROM THE TAX 1M- now have industrial pension plans. Whether this claim Is correct
POSED IN TITLE VILL. ALL OR NEARLY ALL OF THE EXISTING INDUSTRIAL or not, It Is evident that such abuses are possible, and there is
PENSION PLANS WILL NAVE TO BE FUNDAMENTALLY ALTERED nothing In any amendments proposed which In any manner guards
It Is inconceivable that Congress will grant exemptions to In- against this danger.
dustrial pension plans which do not provide for transfer of credits In this connection it should be noted that the arguments which
or payment of benefits to employees who leave employment he- can legitimately he made In support of Individual employer unem­
fore the retirement age. Few, if any, of the existing plans provide ployment reserves do not apply to private industrial pension plans.
for such transfer of credits. Most of the uninsured plans fur- Individual employer accounts In unemployment compensation are
ther provide that the employers may discontinue these plans advocated because they are expected to reduce unemployment
at their option, and these clauses will certainly have to be elimi- since the employers must pay for the cost of their own unemploy­
nated before the Social Security Board can make the finding that ment. In Industrial pension plans employers will likewise try to
these plans give as liberal benefits as those under the Social keep down costs, and can do so by employing as few older workers
Security Act. Changes in these provisions will necessitate changes as possible, or by getting these older workers to come under the
also In the rate of contributions or the benefit scale, or both, national system. Old age, however, is a very different risk from
since the cost of the Industrial pension plans Is figured on the as- unemployment, Inasmuch as everybody gets old, While It Is
sumption that the great majority of all persons hired will never socially desirable that unemployment should be reduced to a
qualify for pensions. In short, all or practically all existing In- minimum, It is socially. undesirable that the workers past middle
dustrial pension plans will have to be fundamentally recast age should be barred from employment,
whether the employers are exempted from the tax In title VIII VITI. THE ADOPTION OF AN EXEMPTION AMENDMENT WILL VERY GREATLY
or not, INCREASE THE DIFFICULTIES OF ADMINISTERING THE SOCIAL SECURITY
IV. IT WILL NOT BE APPRECIABLY, IF AT ALL, MORE DIFFICULT TO ALTER ACT
THE EXISTING INDUSTRIAL PENSION PLANS TO GIVE BENEFITS SUP- One great difficulty will be to determine whether an Industrial
PLEMENTAL TO THOSE UNDER TITLE II THAN 'O ALTER THESE PLANS pension plan does or does not provide benefits which are more
TO MEET THE CONDITIONS WHICH MUST SE .MPOSED IF EMPLOYERS liberal than those which are provided under title II of the Social
ARE TO SE EXEMPTED FROM THE TAX IN TITLE VIII Security Act, An industrial pension plan, for Instance, may, allow
A considerable number of firms with industrial pension plans annuities at a hjgher rate than does title II. but may apply (as
have already announced that if the Social Security Act Is passed Is common) only to employees who have been with the firm for
they will alter their present plans to give only supplemental 6 months, a year, or other specified period of time. Is such a
benefits to those which will he received by employees under the plan more liberal than title II? Similarly, an Industrial pension
provisions of title II. Progressive employers will gain many ad- plan may make no provisions for death benefits. although being
vantages through such supplemental benefit plans. To set up distinctly more liberal than title II in regard to annuity allow­
such supplemental plans will require extensive changes In the ances. Many other similar questions-.are certain to arise, and the
present Industrial pension plans,, but there are no Insurmountable Social Security Board will face an almost Impossible task in try-
obstacles. Mr. Folsom of the Eastman Kodak Co. has stated that Ing to measure equivalents.
In France this company maintains an industrial pension plan Another factor which will greatly increase the administrative
supplemental to the governmental plan and has had no difficulty difficulties is the necessity-for Including in any exemption amend­
with this plan. ment provisions governing taxes or credits when employees leave
As noted under MI above, all or nearly all existing industrial the employment of exempted firms. Such provisions are abso­
pension plans will have to be very materially modified even if lutely essential since the purpose of the Social Security Act is to
an amendment is adopted to exempt employers who maintain ap- provide old-age security for all Industrial workers. If an exemp­
proved plans from the tax imposed in title VIII. These changes tion is allowed, there must either be a provision for the transfer
will at least, in many cases, have to be quite as extensive as those of the accumulated reserve funds or for back payment of the
which are necessary to convert the existing plans into plans giving taxes which the exempted employers would have had to pay on
supplemental benefits to those provided under the Social Security account of the employees who have left their employment and
Act. have come Into the national fund, In either case, the computa­
V. THE EXEMPTION OF EMPLOYERS HAVING INDUSTRIAL PENSION PLANS tions will be most diffilcult, Transfers from plant to plant are
FROM THE TAX IMPOSED In TITLE Vll IS UNFAIR To OTHER very common in American industry, and in the normal case occur
EMPLOYERS many times during the life of an Industrial worker.
In all amendments which have been proposed, employers are IX, THE ADOPTION OF AN EXEMPTION AMENDMENT WOULD PROBAB3LY
not required to elect whether they wish to be exempted for a.U MAKE TITLE VIII UNCONSTITUTIONAL.
their employees or to be Included within the provisions of the Tecntttoaiyo h a moe ntteVI eed
Social Security Act, The amendments proposed contemplate that Tecntttoaiyo h a moe ntteV eed
some of the employees only of the exempted employers r upon whether this Is a genuine tax levy or a subterfuge for an
be outide
ac, Thisis
ofthe don onate theroht
h m unconstitutional regulation of Intrastate commerce. If an ex­
byesoushall bfte left. free to doetermnefor themseve whthether- emption is allowed from the tax in title VII to employers who
plhyesindustrial pensio plan isdeemore faorableetoethem orether establish approved industrial pension plans, It Is evident on Its
Socia Secusrity Act, la smrefvrbl otemo h face that It Is not a genuine tax levy.
Actually. moat Industrial pension plans treat all employees
alike, which means all employees either are better or worse off
u~nder the Industrial pension system than under the Social
Security Act. The freedom of an individual employee to choose
under which plan he will come is Inserted in the proposed amend­
ments, not for the benefit of the employees. hut for the benefit
of the employers. Under the Social Security Act a higher per­
centage for computing annuities applies to employees who have
1935 CONGRESSIONAL RECORD--SENATE 9291
we know that those people who not only have none of the
luxuries of life, who do not have the conveniences of life.
and who, In fact, have far less than the bare essentials of
life, certainly, those people should not be taxed for the
purpose of their own relief. Such is like trying to pull a
sick man up out of his sick bed by his bootstraps when
he has not even a boot on his foot.
Therefore, I am heartily in favor of all the systems Of
relief contemplated by the bill.
I think I am the first Member of this body ever to propose
an old-age pension and much of this legislation by any reso­
lution or by any bill which has been introduced in the Sen­
ate. I think I1 introduced in the United States Congress
the first effort to grant an old-age pension to the people
of the United States.
Mr. President, if we admit--as the Senator from New
York says, and as I have confirmed, and we are both on solid
ground--that 96 percent of the people of the United States
earn far less than the bare essentials of life, earn less than
will buy luxuries or even conveniences, earn even less than
it takes to buy what the United States Government says is
necessary to keep together soul and body, hair and hide,
then certainly we do not wish to levy on those people a tax
for any future benefits when they must live today and are
not making a living today.
Only a week or two ago I saw published a table which
showed that over 95 percent of the savings of the American
people from their earnings are saved by somethig like 3
percent of the people. The table showed that something
like one-half of the people did not earn enough to save
anything at all, and that about one-half of the people. r
think, earned so little that even by starving themselves
their savings were infinitesimal and amounted to almost
nothing. That is one reason why I say to the Senate that
if we tax the beggar in his youth-and 96 percent of our
people, nearly all of them are more or less beggars when
they are making a subsistence wage--to provide for the
beggar in his old age, we are not helping the bc.7gar very
much.
sociAL sxcwuzry Further than that, I wish to say that there are States In
The Senate resumed the consideration of the bill (H. R. the Union, such as the State of Mississippi, that have no
7260) to provide for the general welfare by establishing a natural resources to tax. except bare land. The State of
system of Federal old-age benefits, and by enabling the sev- Mississippi has no oil, it has no gas, It has no sulphur, It
eral States to make more adeq~uate provision for aged per- has no salt. The State of Mississippi has not even a fl-shing
sons, dependent and crippled children, maternal and child ground. That State has to get its shrimp, its crabs, and
welfare, public health, and the administration of their unem- most of the fish used in the State from outside its bound­
ployment compensation laws; to establish a Social Security aries. Most of its fish have to be taken out of the Gulf of
Board; to raise revenue; and for other purposes. Mexico in the waters of the State of Loui-siana, and the
WHO SHALL BE TAXED--THE BEGGAR OR THE MULTIMILLIONAIRE? fishermen have to pay a tax to the State of Louisiana before
Mr. LONG. Mr. President, I hope I may have the atten- the fish can be carried by boat to the State of Mdiussisippi,
tion of the Senators from New York, Mississippi, and other where the canning factories undertake to put them into
States who are interested in the bill, containers for the market.
On Monday I shall offer a plan which I believe ought to The State of Mississippi has been very badly, off through
meet a very hearty response from those who are actually no fault of its people. Many, of my relatives live in the
interested in social security. I do not think there is any- State of Mississippi. I have traveled that State from one
body here who believes he is going to do the working man end to the other, and from one side of the State to the
or poor man any good with a pension or unemployment other.
plan if he is levying upon him a tax which will be as heavy It Is said by authorities of the State of Mississippi that
as the good he will get out of it. In other words, already if it were called upon to supply its one-half of the money
the working man in this country is underpaid. He does not for pensions alone-not for all the other things that it is
receive a subsistence wage. He is not able to lay up any- proposed to do by way of social relief in this bill_-if the
thing, because he does not earn as much as It would take State of Mississippi were called upon to supply the $15 a
to buy the bare necessities of life, and only a very small month that is needed for old-age pensions alone, it would
percentage of our people-less than 4 percent of them--earn take more money than the entire tax revenues of the State
as much as their bare subsistence costs within the same of Mississippi. That does not include unemployment insur-.
period of time. ance nor does It include many other features of this bilL
Those are not my figures alone, Mr. President. Those aye It is a physical impossibility for the money to be raised in
the figures which have been gleaned by many disinterested that way. It never can be done. It never will be done
publications, and by the Government itself. Mr. BARIKLEy. Mr. President, will the Senator yield?
Mr. WAGN~ER. Mr. President, I have said that time and Mr. LONG. I yield.
time again Mr. BARK2LEY. The statement which the Senator makes
Mr. LONG. That is all the more reason why my amend- Is rather surprising to me-that the amount necessary toD
ment should be sponsored by the Senator from New York, be raised by the State of Mississippi, for instance, In order
who, I am glad to say, has said it time and time again, and to match the $15 per month to all those eligible for pen­
I have heard him say it. When we realiz that 96 percent sions under this bill, would amount to more than all the
of our people mnake less than is needed for bare subsistence. taxes for all State purposes. aas the Senator a list or
9292 CONGRESSIONAL RECORD-SENATE JuNE 14
table showing the number of eligibles In the State who Louisiana the " parish police jury." Let me say that resort
would be entitled to this pension, and has he multiplied to that law, of course, has been restricted. Very, few people
that number by the $15 a month or $180 a year which want to take a pauper's oath, and the subdivisions of the
would be the minimum, so that he is sure his statement is State would not be able to pay the annuity If many applied
correct? for It.
Mr. LONG. Yes. I shall be glad to give the Senator the There is only one kind of old-age pension that is worth
figures tomorrow morning, word by word and letter by anything, and that is a universal pension. If pensions are
letter. There is no material difference. I based my state- paid only to those who can satisfy the governing authorities
ment upon figures given me from the State of Mississippi. by proof that they are unable to care for themselves and that
The Governor of the State, Governor Coanor, gave me the a pension is necessary for their welfare, inmnediately the dis­
information I am now giving. I shall be glad to get the pensatlon of the pension fund is subjected to politics of the
figures and give them to the Senator. locality, and it is within the power of the local authorities
Mr. BARKLEY. Does the Senator contend that that in- to say at any time they want to, " John Smith does not need
formation will apply to all the States? this pension ", or " John Smith is not entitled to this pen­
Mr. LONG. I am coming to that. It will apply to many sion "; or, if not that, the applicant is at least forced to de­
of the States. As a matter of fact, it will apply to a large grade himself by proving that he is a pauper before he can
number of the States. Unfortunately, those who have the go on the rolls. The only kind of a pension that is worth
wealth to pay would domicile themselves in States where anything whatever to the people of the United States is one
they would be less affected by taxation, that is paid without people having to place themselves in the
For example, we put on an income tax in Louisiana. Al- attitude of being paupers or Indigents In order to get it.
ready there are men who are going to locate themselves in Therefore, if I were writing this bill, I would strike out the
other States to keep from paying the little income tax of proviso which requires that only those coming within Its
from 2 to 6 percent to the State of Louisiana. qualifications, who might be said to be paupers, shall be paid
I know that these figures are substantially correct, and I pensions; and I would give a pension to every man who had
know that this bill is even less than a shadow. It takes the reached 60 years of age and whose income did not exceed a
principles incorporated in the bills or resolutions I have certain amount or the value of whose property did not exceed
heretofore offered in the Senate, and it proposes to do what a certain amount. That is the only basis upon which to put
is contained in some of them; but no man would ever re- an old-age pension and make it practicable and feasible.
ceive 5 cents' worth of anything if it should be carried out. Secondly, if we are going to pay old-age pensions this
It would simply mean that the laboring man receiving less Government ought to do it. I would not have proij,~ed that
than a wage on which he can live would not only pay for a in the Senate had I not thought that it ought to have been
pension, something he cannot now pay, but the cost of col- done as one of the elements of social security. Let us pen­
lecting the payment from him would be deducted from the sion a man and not tax a man for the pension. If we are
amount received, going to tax my son and my daughter and collect out Of
Mr. WAGNER. Mr. President, will the Senator yield? their weekly pay roll a sufficient amount to pay my pension
Mr. LONG. I yield, and are going to take out the cost of administration from
Mr. WAGNER. Has the State of Louisiana passed any that and give me what is left for a pension, I do not know
law providing for old-age pensions? but that I would be better off if I took such surplus as my
Mr. IXMWG. We have a local pauper assistance law. The son and my daughter might be able to give me, without going
State of Louisiana has done much social-security work, in- to the expense of paying the administrative costs in Wash­
cluding what are known as the " paupers." We do not call ington.
our payments " old-age pensions ", and they are not old-age Mr. NORRIS. Mr. President-
pensions, no more than the people to be paid by this bill. The PRESIDING OFFICER. Does the Senator from
This ought to be called a " pauper's bill.", because we do not Louisiana yield to the Senator from Nebraska?
give -an old-age pension when we require a man to take a Mr. LONG. I yield.
pauper's oath and prove that he is not able to live without Mr. NORRIS. While I think the Senator's statement and
the so-called "1pension." the general propositions laid down by him as to compelling
I want to show Senators how this measure will act. In the people who are going to be the beneficiaries to pay the
Louisiana we had a free-schoolbook law. All that a child taxes have a great deal of weight, nevertheless, if there were
had to do to get free schoolbooks was to take the pauper's nothing in the bill except what the beneficiary when he got
oath, or to make out a declaration that the father and old was going to get, It would still, I believe, have many
mother did not have the means with which to buy school- elements of merit.
books. That was a thing that we could not get the chil- Mr. LONG. That is insurance.
dren of Louisiana to do. They would rather stay away from Mr. NORRIS. Yes. And still it could be said, as an ob­
school than to make the pauper's declaration that their par- jection to such a measure, " If you would let me handle the
ents were not able to buy books for them. So what we did money, I would have made more out of it." Sometimes that
In Louisiana on this social-security work-I call it social- would be true, but we all know, from our own experience
security work; education comes within that purview, I be- that, as a general rule, it has not been so.
lieve-was to provide that every child could have free Mr. LONG. I1 admit all that.
schoolbooks whether he did or did not take the oath of a Mr. NORRIS. Most men when they were earning, if they
pauper. The books came to him as an absolute matter of had properly invested their money, or If they had not lost
right. Every child used free schoolbooks. None, rich or it in some plan by which they expected to make a lot of
poor, used any other kind, money, would have when they reach old age a pretty good
We have here what Senators call an " old-age pension" "1nest egg ", and so it would be a good thing if we did not
bill. We never have said that we had old-age pensions in do anything else-I should like to do more, of course, as
Louisiana, but to some extent we have what there is con- I think everyone else would, but if we only went that far,
tained in this bill. We call it a " pauper's law "1, under which It would accomplish a great deal of good.
in some cases a man is given a pension. As many as 500 Mr. LONG. If they were made to save something?
persons are beneficiaries of that law in one parish in my Mr. NORRIS. If they were made to save something.
State-in other States it would be called a " county "--and Mr. LONG. I admit that; I admit that every ma- ought
I understand the parish St. Landry has at one time had a to take out a life-insurance policy; if he could, he ought to
large number, maybe nearly as many as I have mentioned; have some life insurance. I always have had, but It Is
at least it did have at one time, if it has not now. Under mighty hard to understand how a man can lay up very
that State law an annuity of $12 or $15 a month is granted much for his old age when during his useful years he Is
to those in a helpless condition. That is what we call a making less than it takes to live in the barest poverty. 'That
"pauper's aid ", given to the beneficiaries by the county is the point I am making. How can a group of men, 96 per-
board or the governing authorities, by what we caU i In cent of whom are earning less money than it take to live
 1935 CONGRESSIONAL RECORD-SENATE 9293
in 'what Is even worse than poverty, lay up enough money I have never yet known of anybody to propose an old-age­
for the future to be of any real good? It would be better pension plan that was worth the paper it was written on
for a man to starve himself a little more during his useful when it proposed to pay a pension to anyone later than at
years than he is now starving himself or that at least 96 60 years of age. At the age of 60 there is generally, no em­
percent of us are starving ourselves. In other words, if we ployment possible. I know Mississippi. I know what Mis­
are eating half enough it would be better to eat, two-fifths sissippi needs as well as almost any man, probably as well
enough and to save up one-tenth against the time when it as its own Representatives in Congress, because I have been
will be needed even worse. But we cannot collect very much through the State many times. There are the same kind
money for the Federal Treasury if we are levying the tax of people in Mississippi as there are in northern Louisiana
upon 96 percent of the people who are now earning, accord- in the rural sections. My father and my grandmother camne
Ing to the Government tables, less than it costs not for from Mississippi, Smith County. I know Mississippi people.
luxuries, not for conveniences, but for the bare subsistence If we are going to start at the age of 65 with a pension,
necessities of life, then my figures will have to be changed, but I do not propose
Mir. BARKLEY. Mr. President, will the Senator yield? to start at the age of 65. I propose to start at age 60. If
The PRESIDING OFFICER. Does the Senator from we are going to start at age 75, we would have to change my
Louisiana yield to the Senator from Kentucky? figures again. I am told that for the first few years the
Mr. LONG. I yield. bill would apply only to those who are over 70 years of age.
Mr. BARKLEY. Following the inquiry I made of the It may be that that provision was stricken out of the bill,
Senator a while ago, he was referring specifically to the State but there was a provision in the bill originally that It should
of Mississippi. I find in the hearings, on page 321, a table apply only to those over 70 years of age. That was con­
showing the number of eligibles in 1934. tained in the original recommendation of the President,
Mr. LONG. What does the Senator mean by "1eligibles "? though it may have been stricken out of the bill.
Mr. BARKLE Y. Those above 65 years of age. Who are eligible? Are we going to leave the matter of
Mr. LONG. I propose to pension at the age of 60. who shall be eligible for this pension to be determined by
Mr. BARKLEY. In the hearings it is shown that there politicians, like the relief is now, where a man is told. "It
are 14,218 people in the State of Mississippi- you do not vote right you will be taken off the relief roll "?
Mr. LONG. Who are over 65? I do not want any old man to have to depend upon politics
Mr. BARKLEY. Who are over 65. in order to stay on the pension roll or the relief roll, be­
Mr. LONG. I would not have the pension start at 65. cause it is the rottenest, crookedest, most corrupt game that
That is not a pension, is carried on in the United States today in politics, and that
Mr. BARKLEY. In order to match the $15 per month. Is saying something.
which amounts to $180 a year, the State of Mississippi If we have to have the eligibility of every man for a pen­
would be required to contribute $2,559,000. sion determined by a local board or a State board or a Gov­
Mr. LONG. What does the Senator mean by eligibles at ermient board, if it is necessary to have a local board or a
65-if they have reached 65 regardless of what they are State board or a Government board determine that he is
doing? entitled to a pension, and if he must be subject to being
Mr. BARKLEY. If they have reached 65 and are eligible taken off the pension roll from day to day Qr from month to
for pension, month, that is not the kind of plan I want to see adopted.
Mr. LONG. What does the Senator mean by " eligible "? If that is what this is to be, it would prove to be a _gurse and
Aft. BARKLEY. I mean under the terms of this bill. If not a benefit. If a man were compelled to realize from day
the Senator is going to apply It to everybody who reaches to day, from month to month, from year to year, that he is
60 or 65 or whatever the age may be, regardless of condi- a pauper, and must go through the embarrassment of proving
tions or circumstances, of course the number would he that he is a pauper, that he has not any hogs in the woods
Is -ger, but I am taking the number who would be eligible nor any cow to milk nor any land to call his own, nor any
under this measure. So it would require the State of Mis- son who might be helpful, then we would not have a pension
sissippi to raise two and one-half million dollars, and it system at all: we would not have even a pauper system to
would require my State to raise about $3,000,000. For 'the start with. I make that as an absolute statement of fact
ordinary expenses of the State we raise now about $18,000,- based upon my experience in social work in a State that does
000, which, of course, includes the -- ad tax and all that. I the best social work in America today-the State of
call the attention of the Senator To that because of his LouRisrian.
statement a while ago- I propose that a pension should be paid to people who are
Mr. LONG. I will show the Senator I am right. over 60 years of age. I know Mississippi, I know Louisiana,
Mr. BARKLEY. That the contribution of the State of I know Arkansas, each State nearly as well as I know the
Mississippi, for instance, and I supposed he was taking that other-that is, the general run of people. I have traveled
as typical of a great number of States-- through those States all my life. I traveled them when I
Mr. LONG. I am right, and what the Senator has there was 16 years of age and 17 years of age and many times since.
Is wrong. I have been through them many, many times. Of all the
Mr. BARKLEY. Is greater than all the taxes they raise people who have passed the age of 60 years in Mississippi
for all purposes. Of course I am not going to get into a there are not 10 percent who are not entitled to an age
controversy with the Senator- allowance.
Mr. LONG. We will not have any controversy; we will go According to Insurance statistics Issued by the life-Insur­
on the figures that the Senator cannot dispute; we will not ance companies, we are told that only EL few out of every
argue on figures. Here is what this bill does: It proposes hundred who passes the age of 60 is able to take care of him­
to start a pension first at 65. If we are going to start pen- self. Senators have some Government figures tending to
sions at 65, why not make it 75? Then we will not have any show that nearly everybody over 60 years of age can take
expenses at all; or make it 85. That would be the best way, care of himself, but the figures of the insurance companies
[Laughter.] who have been in the business say to the contrary, and I will
The PRESIDING OFFICER. The Chair will remind the show it by their advertisements. They read something like
occupants of the galleries that under the rules of the Senate this:
no signs of approval or disapproval are permitted. Only so many out of every 100 persons who has passed the sog
Mr. HARRISON. Mr. President, will the Senator permit of 60. are not dependent upon charity or upon his folk or someone
me to interrupt him? else for help.
Mr. LONG. Let me finish this; then I will be glad to Therefore I say that in my opinion from 90 to 95 percent
yield_? To begin with, men cannot obtain employment at of the common, ordinary run of people over 60 years of age
an age past 50, and the greatest economist have argued that are eligible to draw a pension, and the only way there wil
the age of unemployment ought to be 45 or 50. ever be a pension provided that Is fit to talk about wilt be
9294 CONGRESSIONAL RECORD-SENATE JuNF 14
to provide a pension that shall be given to every eligible man raise more money than it raises for all other purposes put
free of politics. Otherwise it would meanl that in my State together that are paid from the State treasury, of Louisiana.
I would be one of the men controlling the Pension. if I con- I have forgotten how many millions of dollars it Is, probably
tinued as a friend of some of the administrators down there $12,000,000 or possibly $14,000,000. I have not the exact
in the area in which I live. It might be that Senator Huey figures.
Long and Gov. 0. IK. Allen and our political organization Mr. President, I am not condemning this effort. If I had
would have the right to say who should get a pension and been drawing an old-age-pension bill, I might have called
who should not get a pension in Louisiana. into counsel the person who first proposed an old-age-pen.
Do I know what that would mean? Indeed, I do. I know sion plan to the Congress. I might have called in that kind
I would have the right to put 14,000 people on the pension of person. I1 might not. Perhaps I would not have been
rolls of Louisiana; and that is about the same number Mis- on friendly terms with him, and then I would not have
sissippi would have. We have about the same population in called him in; but the chances are I would have called in
Louisiana that Mississippi has. Do I not know if I had the someone who had first proposed old-age-pension plans to
power and the right to put 14,000 people on a free pension the United States Senate.
in Louisiana that Huey Long's and 0. K. Allen's politicians Do not misunderstand me. I am not condemning this
would put Long and Allen men on the pension roll if we effort. I am not fighting this bill. I am not opposing this
would let them? Do I not know that Representative FER- bill. It probably will do no harm, to speak of, that will not
NANDEZ, of New Orleans, who would have about 2,000 people have some corresponding good. Like the Senator from
eligible for the pension roll in his congressional district, Nebraska, I think, taking it up one side and down the other.
would try to put 2,000 Fernandez people in his district on the it is a gesture with some harm and some good in it; but
pension roll, when he has 5 or 10 or 20 times that many apparently it makes a pretense to carry out the principles I
people down there who need a pension? have advocated. While it does not actually do so, never­
Are we going to have a political thing of that kind? Do I theless it is not a bill that I should oppose, except for being
not know that some of the parishes even in that State who a void. What I am trying to show to the authors of the
have a few hundred on the pension rolls, or " pauper rolls ", bill is this:
as we call them down in Louisiana, the politicians would You want a pension bill enacted, and I want a pension
have only their friends on the roll or the fathers of their bill enacted. This bill does not propose to enact a pension
friends or the mothers and aunts of their friends? bill. We have here a pauper's-oath proposal which, if it
You are going down to my State of Louisiana and tell me ever amounts to anything, will operate in many States in
we can put only 14,000 on relief. Who most needs a pension a way that is fatally defectile Therefore, what I am say­
in Louisiana? The colored people are among the poorest ing to Senators is this:
people we have in some instances. About one-third to 40 On Monday I shall, come ii here-I hope before this bill
percent of our people are colored people. They do not vote shall have passed the stagec amendment-with what? I
in many of the Southern States. How many of them will want Senators to listen to me. I shall propose that we pro­
ever get on the pension rolls? Huh! How many do YOU vide an old-age pension of $30a month. Payable to whom?
think? I give you just one guess to figure out how many will To every man and woman in t.pe United States who is over
ever get on the pension rolls unless their sons and daughters 60 years of age who has an income of less than $300 a year
and they themselves are on the voting list. That may seem or $500 a year, whatever should be the proper amount-
like cheap demagoguery, but I am not afraid to say it. I I am willing to be governed in that matter by the advice of
am one southern Senator who can tell the truth about this my colleagues-or whose property ownership is less than a
matter. I am not afraid to say it. I do not want a pension certain amount of money. That is what I shall do. I shall
system that will be of help only to those who declare them- propose to carry out unemployment insurance and every­
selves paupers and prove themselves unable to earn a living thing else that is in this bill. The bill does not propose to
and eligible to be put on the roll, do enough.
There is only one pension that will be worth anything at How would I do it if it were left to me? Would I tax the
all, and that is a pension which goes to everybody who pay roll of the man who is working? No; because the work­
reaches a certain age. Do not make it an age that is the ingman is not getting today enough money to live on, even
dying age. Do not make it an age when the death rattle is though he is working-and half of those who come within
soundin in a man's throat. Make it an age when he is the class of workingmen are not working, I certainly would
reasonably certain not to be able to take care of himself. not say to a man wh(,, according to the Government's own
If you are not going to start a man's old-age allowance until statistics, is making less money than it takes fairly to sub­
he is 65 or 70. you are going to wait until the Lord's three- sist upon even in poverty that he ought to be made to pay
score and ten years' time allowed man on earth is nearly a tax for a pension in his old age, when he is not half living
over. in his young age.
Do not make it necessary that one must depend upon the Therefore. I shall propose an amendment on Monday
whims and decisions of politicians to get on the pension roll, morning, or Monday afternoon-whatever time 'we meet-
Therefore, if Mississippi pays a pension to every man who which will do all the good things pretended to be here con­
Is 60 years old who needs it-I know what I am talking templated. I shall not strike out one of the benefits pro-
about a,,d the Governor of Mississippi knows what he is Posed by the bill. I shall only add to them, and provide
talking about-if we provide payment of a pension to every that in order to get the money to pay them we shall levy
man 60 years of age who needs it, it will cost the State of a tax of 1 percent upon all persons who own wealth and
Mississippi one and one-fourth to one and one-half times property in the United States which is more than 100 times
its present tax revenues just to pay the pension. greater than the average family fortune, and graduate the
I took the United States census as my guide. I ascer- tax up on the succeeding millions owned by any one man,
tained from the United States census how many people in so as to get whatever amount of money ma be required to
Louisiana were over 60 years of age. Then what did I do? carry out the purposes of the bill.
I took the United States insurance companies' statistics and That would mean that $1,700,000 of every man's fortune
figured from that what percent of those people were able -would be altogether exempt from the taxes I shall propose,
to earn their own living. After deducting that number Therefore, the man who has one and one-half million dollars
obtained in that way, I found that to pay this pensic it shall not have to pay a copper cent for the purposes of this
would cost Louisiana more money than it raises for all other bill; but if he has $2,000,000, he will have to pay 1 percent
purposes put together in the State of Louisiana. Accord- on, say, the last half million. Then I propose to make the
Ing to the census reports, after deducting the people the tax 2 percent, and 4 percent, and 6 percent, and graduate
insurance companies say are able to take care of them- it on up, so that the man who has four or five or six million
selves, still the State of Louisiana, to pay the others over dollars will pay a higher tax in proportion. I do not propose
60 years of age a pension of $15 a month, would have to to tax the beggar or the weak, and I do not propose to tax
1935 CONGRESSIONAL RECORD-SENATE 9295
Persons who are already undernourished and already under- Why, Just see what is provided. Read this. This IsI really
paid. funny:
That Ls the amendment with which I am coming In here For the purpose of enabling each State to furnish financial
on Monday morning. That will carry out the purposes of the assistance, as far as practicable under the conditions In such State-
Government. We are supposed to be decentralizing wealth. Listen to this:
We Ought not to tax the beggar to help the prince, or even
tax the beggar to help another beggar. We ought to tax the to aged needy Individuals-.­
prince to help the beggar if we find that the beggar is such a Aged needy individuals, paupers, found to be paupers by,
Personi as ought to be helped by bounties granted to him the governing board of the county or State, controlled by the
by law, politicians, of whom I am onel
So I ask my colleagues to hold an open mind for the I am trying to keep the people out of the hands of men
amendment I shall propose here Monday afternoon if we Of my type and worse.
meet Monday at noon, or Monday morning if we meet Mon- For the purpose of enabling each State to furnish financial
day morning. I ask my colleagues to think to themselves in assistance. Bs far as practicable under the conditions In such
thisfasion Areyouwilingto
g bak t you SttesandState, to aged needy Individuals, there Is hereby authorized to
thi ou
fahio:illngto
re o bck o ourStaes ndbe appropriated *$49,750,000 a year.
tell Your people that you have voted for " social security " or
"social relief " when, in order to get it, you have called upon Think of that! Talk about appropriating the little, in­
them to pay a tax which they cannot pay? Are you willing finitesimal amount of $49,000,000 to pay old-age pensions
to say to the laboring man, " I voted for unemployment in- to all the people in the United States who are In need of
surance that will amount to anything ", when all you have those pensions. It is the most absurd and ridiculous thing
done is to vote to tax his own pay check, and that check is I ever heard of in my life. That will not pay for the rib­
now less than he can live on? bons of the typewriters it will take to mail out the envelopes
That Is what I want the Members of the Senate to think to the old-age pensioners of the United States. I know what
about; and I want them to think whether or not they will be I am talking about. I figured this thing out long, long ago,
willing to support this beneficial legislation along the lines when I introduced the first old-age pension bill or resolu­
that we said in the Chicago convention we would advocate, tion that ever came into the United States Senate, at least
namely, legislation that would give the people a share in the that I ever heard about.
distribution of the wealth of the country. I am quoting the I figured out how much It would cost. Do Senators know
words of the President of the United States, who delivered how much it would take? It would take $3,000,000.000. That
that promise at the Chicago convention, that we would pro- is what it would take, according to the statistics of the
vide a share in the distribution of the wealth of the country, United States Government, deducting those who earn their
to the people who need It. That is what we said. We are own living according to the tables of the life-insurance
not doing that when, In order to support the benefits of this companies-and they are the most accredited statistics of
bill, we tax the poor man who is making a thousand dollars a which we have any knowledge. According to the Govern­
year or $500 a year, who has a family that it takes $2,000 a ment statistics and according to the deductions made by the
year to clothe and feed and house, and who therefore needs life -insurance companies, according to their tables-and
an Income of $2,000 a year. their mortality tables have been accepted as authoritative
Mr. BONE. Mr. President- by acts of Congress and by all the courts--according to
Mr. LONG. I yield to my friend from Washington. them it will take something in excess of $3,000,000,000 to
Mr. BONE. I realize that I have no right to suggest to the pay old-age pensions to the people in the United States
Senator the propriety or lack of propriety of any amendment who are entitled to them at the rate of $30 a month. And
he may offer, or the practical wisdom of offering an amend- the proposal here is to appropriate $49,000,000.
mentto
bll;butI
ny nea wonerig i tha sot o an Talk about appropriating $49,000,000. and go back to the
anendmeto anmn illt but Ieoamdzwonern
bif ht otfa people and tell them that we have provided for old-age
amenmentmigt
no jepardze he bllpensions. That will not pay half the pensions in the city
Mr. LONG. It would not hurt anything if it did. of New Orleans alone. It is an absurd thing to talk about,
Mr. BONE. I merely wish to ascertain the Senator's idea if we are to do anything.
as to whether it might not be wiser to propose the type of Then where are we to get the $49,000,000? It would
amendment the Senator has in mind to one of the revenue- mean taxing the poor devil who is to get the pension. it
raising bills which will come over from the House, because is ridiculous! It is absolutely absurd!
there might be those here who would be willing to vote for I want my good friends to know I am with them heart
this bill, and are very anxious to vote for it, who might not and soul and body; I was away ahead of them in this old-
be willing to vote for it if that sort of a rider were attached. age-pension matter.
I am in harmony with the Senator's idea of increasing Mr. WAGNER. Mr. President-
taxes in order to meet the necessary expenses of the Govern- The PRESIDING OFFICER (Mr. Bu~itz In the chair).
ment and the necessary expenses of the type of legislation Does the Senator from Louisiana yield to the Senator from
we are now considering; but I am so highly desirous of seeing New York?
this type of legislation enacted that I am fearful that any- Mr. LONG. I yield.
thing attached to it of that character, which we might attach Mr. WAGNER. I think the Senator Is confused. The
to another bill with more hope of having it adopted, might $49,000,000 is for old-age assistance. That is to be paid by
jeopardize this bill, the taxpayers of the United States.
Mr. LONG. The place where it belongs is on this bill. Mr. LONG. Very well. That is the Government's part of
Mr. BONE. I have no quarrel with the theory of raising it. It is our part.
more money to care for these very large expenses. Mr. WAGNER. It is the Government's part. The other
Mr. LONG. I am satisfied that the Senator has not been part is to be paid by the taxpayers of the States.
here to hear my remarks. I have demonstrated that the Mir. LONG. The other half?
people will not get anything under this bill. I have demon- Mr. WAGNER. Today all of the States which have pen­
strated it very thoroughly, I think. as the Senator will see sion laws-and I want to remind the Senator that his State
if he reads my remarks; but if we are to provide money for has not one-
old-age pensions, it ought to go in this bill. We propose in Mr. LONG. According to what these Government statis­
this bill to provide money for old-age pensions, and we pro- tics show, Louisiana has not anything.
pose in this bill to provide money for unemployment in- Mr. WAGNER. The Senator's State has not such a law;
surance. If we are to provide for old-age pensions and if we that is what I mean. They have not a Pension law, and 35
are to provide for unemployment insurance we shall have to States have Inaugurated a system of pensions.
provide for raising the money ini some way, because it is not Mr. LONG. Louisiana has one of those things.
provided for hers, Mr. WAGNER. No.
 9296 CONGRESSIONAL RECORD-SENATE JUNE 14
Mr. LONG. Louisiana calls it a pauper law. we will not ment to a pauper. TMat is what is done. it is not a pension
call it a pension, because a man who has to take a pauper's at all, nothing of the kind.
oath is not getting a pension. Under the proposed legisla- For a long time I have wanted to talk this matter over
tion a man would get a pension whether he took a pauper's with the Senator from New York, because his heart is in the
oath or not. This thing says " needy people." right place and his mind, I believe, would yield to the figures.
Mr. WAGNER. I do not desire to get into a controversy If he will come and listen to the figures I will give him from
with the Senator about that, because the records are here the life-insurance companies of the State of New York and
as to whether States pay pensions or not, and how much the city of New York, which he knows to be reliable, and will
they are. compare those figures with the Government statistics, he will
Mr. LONG. The records are not here, find the conditions in States like the State of Mississippi and
Mr. WAGNER. I was afraid the Senator was confusing the State of Louisiana, which latter State is not so much
this. better off but Is somne better off than Mississippi, because we
Mr. LONG. No; I am not. have minerals there. Oil, and salt, and fish, and oysters, and
Mr. WAGNER. It is money supplied by the taxpayers of crabs, and pepper, and gas, and minerals like salt and cop­
the United States. per, and all such minerals, are found in abundance In the
Mr. LONG. I understand. It Is supposed to provide for State of Louisiana. There is located in Louisiana the big
payment up to $15 a month by the Government of the port of New Orleans, and it can boast many things like that
United States and $15 a month by the States, in order to which the State of Mississippi does not possess. It also has
make the $30. a few millionaires from whom to collect income taxes, some.
Mr. WAGNER. Exactly, thing of which Mississippi has not so much,
Mr. LONG. Forty-nine million dollars is half of it, then. I beg Senators to listen when I tell them that, according to
and the State has to put up the other $49,000,000, and that the statistics of the life-insurance companies, there are only
will make $98,000,000, substantially a hundred million dol- a few men out of every hundred who pass the age of 60 who
lars, and we would have one hundred million when we need are not dependent upon charity for support.
three billion. The mortality tables of the larger insurance companies
Mr. WAGNER. I should be glad to examine the Senator's have been accepted by the Government, and have been ac­
figures- cepted by courts in every State, and by United States courts.
MW.LONG. I have been trying for years to get the Sena- If today we pay a pension to everyone in the United States
tor to talk this matter over with me. over 60 years of age, we shall pay out not less than $3,000,.
Mr. WAGNER. I do not want to interrupt the Senator; 000,000 a year. If we are limited to the $49,000,000 provided
I merely wanted to correct what I thought was misinfor- by the bill, and $49,000,000 more, or $100,000,000 in all, that
mnation. will give $1 where we need $30; and then if there is taken
Mr. LONG. No; I am right, absolutely, out of that the cost of administration, we shall not have
Mr. WAGNER. The States of the Union today are paying enough money to pay the postage necessary to send out the
a little less than $40,000,000 in old-age pensions. money. I am going to bring in the figures on Monday.
Mr. LONG. Very well. If the beii~tcr fr-m New York [Mr. WAGNER] will give me
Mr. WAGNER. At least we are matching, and, of course, part of his time on Sunday I will meet him and give him
as the number of States making such payments increases, the figures in his hotel, or I will meet him in his office, or
our assistance will increase, and we will hope that Louisiana he can meet me In my office, and I will show him that, In
will pass a law. his own words, 96 percent of the people today are making
Mr. LONG. If the Senator will listen to me, I will show less than a mere subsistence living, and that we cannot
him that Louisiana has such a law. Louisiana authorizes afford to tax people of that kind for their relief in their
Its police juries, which are the same as the boards of gover- old age when they are not now getting enough money with
nors of the counties, to pay paupers, when they want to put which to buy food to eat.
people on the pauper's roll. We give 'it the right name. Mr. BONE. Mr. President, will the Senator yield?
Louisiana calls a spade a spade, and a " t " a " t "', and an Mr. LONG. I yield.
,.I" an " i." We do not call these payments old-age pensions. Mr. BONE. Will the Senator tell us what proposal he
We call them help to paupers, and that is the definition makes in his amendment with respect to the increase in
which ought to be given to what is proposed here, taxation?
A pension is something given to someone like a soldier. Mr. LONG. Yes; I will. Here is what I propose: I pro­
The Spanish-American War veteran does not have to take an pose that the money with which to make all these relief
oath and say that he Is a pauper In order to get a pension, payments shall be raised by tax, but that the tax shall not
The World War veteran did not have to do it. The Civil be levied on any except those whose wealth exceeds 100
War veteran did not have to take an oath that he was times the average family fortune of the United States.
needy and destitute in order to get a pension, and I wish to Mr. BONE. Will the Senator leave that to be determined
say to my friend from Mississippi and to my good friend by the Treasury Department, or how will he make that
from New York-and he is my friend-I say to them that calculation?
we know the dictionary too well to call such a thing as is Mr. LONG. I will put the calculation in the bill, or do
proposed a pension when it is paupers' assistance. That is it otherwise. I will provide that there shall be an exemp­
what it is. I can take the dictionary and show that this tion on a man's first $1,700,000.
thing is not a pension. It is assistance to paupers who take Mr. BONE. $1,700,000,000?
the pauper's oath, provided politicians approve them. That Mr. LONG. No; $1,700,000. That amount is exempt from
Is all It is. the tax. On the first $1,700,000 no tax is to be paid. That
Down in Louisiana we are honest people In our use of lan- limit is too high, but still we can make that limit. I am try­
guage. I do not mean that others are not honest in their ing to make the limit so high that no one on earth will have
language, but I mean we are not extravagant. We give a right to kick about it. It ought to be that the exemption
paupers help. Just as the bill before us Proposes paupers' help, was no more than $100,000, but we can make the limit the
and the administration has been sandbagging Louisiana with figure I have given, so that there shall be no tax for the
these Government statistics because we will not change the Purpose levied on any fortune except one which is 100 times
word " pauper " to " pensioner." A pauper is not a pen- the size of the average family fortune, and not take money
sioner. away from the poor devil who is earning $500 and who
If my friend from New York will do what he ought to do actually needs $2,000 to buy food and to buy the necessities
about this matter he will change the wording and say " pau- of life. The poor fellow who only has enough for a bare sub.
per's assistance"1instead of " old-age assistance ", because sistence, the man whom we claim we are helping, who Is
when the language is " to aid needy individuals " It is taken starving to death already, who cannot send his children to
out of the category of being a pension and it is made aLpay- school, whose children's clothes are tattered-we cannot
1935 CONGRESSIONAL RECORD-SENATE 9297
afford to levy a tax on him for an old-age pension. We are Mr. President, I shall be here on Monday with the amend­
not doing any good to him if we do. In many cases we rnents I have suggested. If Senators have any suggestions
should be doing harm to him, to offer, I hope they will offer them. I shall be glad to give
If we are going to give old-age pensions, let us give them copies of my amendment to Mcmbers of the Senate who are
to those who need them, but not provide for them in such a Interested in It, between now and tomorrow morning, as
way that the determination of who ii to receive them will soon as I shall have perfected my amendment; and when I
simply be made by the State politicians or any bureaucrat. do, if they have any suggestions to make, either before. we
I Ought to be able to convince some of my friends here that come to the Senate or on the floor of the Senate, which
I am somewhat idealistic in this. By what I propose I am would perfect the amendment in accordance with what they
excluding myself and friends from having the right to say think is their better judgment, I shall be glad to have them,
who shall draw a pension in my State and who shall not In order that wre may follow that system rather than follow
draw a pension in my State. I am excluding myself from the plans that are set forth and enumerated In this bill,
having a hand in handling that great political club with which are not ample, not suffIcient, which are burdensome~
which we could say to a man, " You will have to be with and in many instances will do more harm than they will do
HuEY LoNG in order to get the pension, and if you are not good.
with him you will not get it," because I am looking forward Mr. HARRISON. Mr. President, I was about to make a
to what will be done in 47 other States, and I am looking few observations, but I notice that the Senator from Louisi­
forward to the time in my own State when the pension will ana has left the Senate Chamber, and I do not care to make
mean something to the people. I know It does not mean them In his absence.
anything as the bill is now drawn. Mr. McNARY. Mr. President, will the Senator be con­
Therefore, I desire to say to my friends, If any of them tent to recess at this time, and begin with the committee
wish to make any suggestions between now and Monday con- amendments in the morning at 12 o'clock?
cerning my amendment-which does not provide for a tax, as Mr. HARRISON. I think there ought to be an executive
I said, upon -the first $1,700,000-I shall be glad to have session at this time.
them do so. If any one thinks the figure ought to be lower Mr. McNARY. I have no objection to that. However, on
than that I should agree with him, and if the Senate would account of the great number of Senators who are absent
support a lower exemption I should prefer to have the lower from the Senate Chamber at this time, I think we ought not
exemption. However. I desire to put it on a basis where to begin with the committee amendments until tomorrow.
no one can say that the taxation for this work of social Mr. HARRISON. I do not wish to have the Senate get
security has been placed upon the back of the man who can Into any controversial matters tomorrow. I am willing to
be hurt a little bit by paying it. That Is what I wish to do. agree that we shall recess until tomorrow if we can have an
Mr. BONE. Mr. President. I did not hear all of the Sen- agreement as to limitation of debate, and so forth, and try,
ator's argument. Does he propose his tax in the form of a to wind up the consideration of the bill on Monday.
capital levy? Would there be any objection to having a recess taken
Mr. LONG. Yes, sir. until 11 o'clock tomorrow morning?
Mr. BONE. I am wondering if that could be sustained Mr. McNARY. I do not think the recess ought to be
under our Constitution without an amendment, taken until 11 o'clock a. m. I think it should be taken until
Mr. LONG. Yes, sir; it can be sustained. Not only can 12 o'clock noon tomorrow.
It be sustained, but it was the basis upon which the law of Mr. HARRISON. I should like to have disposed of the
the United States was founded. It was the basis of 'the law Senate committee amendments about which there Is no ques­
upon which the United States started as a Government, and tion, or about which there will be no debate. I do not expect,
the only reason why we are in this fix today is because we however, to conclude the consideration of the bill tomorrow.
departed from it. According to the statement made by the Mr. McNARY. If the Senator will agree to the Senate
Senator from New York [Mr. WAGNER]-and It should have taking a recess at this time until 12 o'clock tomorrow, I can
been made a thousand times more strongly-no one can assure him that there will not be any unnecessary delay, but
question, topside nor bottom, the right of the 'United States I should not like to have the session commzence at 11 o'clock
to levy a tax on property and to graduate the tax. Nobody in the morning.
can question It. There is not a doubt about it.
I am not going to argue with the Senator from New York
[Mr. WAGNER] the constitutionality of the taxes imposed
under this bill. It Is barely possible the Supreme Court may
not sustain the constitutionality of some of the levies pro­
posed in the bill. I hope they will, but they may not. I am
not going to give the Senator from New York the kind of
advice I gave him on the N. R. A., because he did not take
my advice the last time and he might not take it this time;
and since I was right the last time and he did not take
advantage of my advice, he may be right this time, because,
to say the least, both might be a guess; and in view of the
fact that my friend from New York is a better lawyer than
I am this might be his time to be right. I am not going
to argue the matter.
It may be that the Supreme Court of the United States
will hold the levies under this bill to be not valid under the
Constitution; but there is no question about the levy of a
uniform tax on property-none whatever. There can be no
doubt about that. Nobody who has ever gone through a
law school will ever be found who can argue anything to the
contrary. There is no doubt about that. What I tell the
Senate is constitutional. What I tell them is real. What
I tell them is actual. What I tell the Senate helps these
people. What I tell the Senate punishes no one. It gives
the people of the United States actual unemployment relief,
actual pension relief, actual social relief, and the burden of
it is borne in such amounts as are ample to create a fund
30. times the one provided in this bill, and the burden of it
is borne by people who have $1,700,000 or more.
 June 15, 1935

1935 CONGRESSIONAL RECORD-SENATE 9351

SOCIAL SECURIT
The Senate resumed consideration of the bill (H. R. 7260)
to provide for the general welfare by establishing a system
of Federal old-age benefits, and by enabling the several
States to make more adequate provision for aged persons,
dependent and crippled children, maternal and child wel­
fare, public health, and the administration of their un­
employment-compensation laws; to establish a Social Se­
curity Board; to raise revenue; and for other purposes.
9354 CONGRESSIONAL RECORD-SENATE JUNE 15
"assistance assuring, as far as practicable under the con­
ditions in such State, a reasonable subsistence compatible
with decency and health to aged individuals without such
subsistence " and insert " assistance, as far as practicable
under the conditions in such State, to aged needy indi­
viduals ", so as to make the section read:
SECTION 1. For the purpose of enabling each State to furnish
financial assistance, as far as practicable under the conditions in
SOCIAL SxCUaRrY such State, to aged needy Individuals, there Is hereby authorized
The enaecosidratin
rsume o th bil (H R.to be appropriated for the fiscal year ending June 30, 1936, the
rsume
The enaecosidratin o th bil (H R.sum of $49,750,000. and there is hereby authorized to be appro­
7260) to provide for the general welfare by establishing a priated for each fiscal year thereafter a sum sufficient to carry
system of Federal old-age benefits, and by enabling the out the purposes of this title. The sums made available under
mak aequte
moe rovsio fo aged this section shall be had
used for making payments to States which
several States to maemr dqaepoiinfhave submitted and approved by the Social Security Board
persons, dependent and crippled children, maternal and established by title VII (hereinafter referred to as the 'Board")
child welfare, public health, and the administration of their State plans for old-age assistance.
unemployment compensation laws; to establish a Social Mr. AUSTIN. I suggest the absence of a quorum.
Security Board; to raise revenue; and for other purposes. The PRESIDING OFFICER. The clerk will call the roll,
Mr. COSTIGAN. Mr. President. in the Washington Daily The Chief Clerk called the roll, and the following Senators
News of June 14, 1935, appeared an editorial which merits answered to their names:
consideration. It is entitled "1Twenty Years Lae." The Adams Coolidge La Pollette Radcliffe
concluding paragraph reads as follows: Ashurst Copeland Lewis Reynolds
The United States is 20 years or more behind advanced indus- Austin
Bachman Costigan
Couzens Lonergan
Long Robinson
Russell
trial countries In adopting a national social-security system. Bailey Davis McAdoo Schell
Further delay would only add to relief burdens, economic un- Bankhead Dickinson McCarran Schwellenbach
balance, and human fears. Barkley Donahey McGill Sheppard
wilapa
omnadwmnBlack Duffy McKellar ShIpstead
The editorial, as a whole. wilapa omnadwmrBone Fletcher McNary Smith
who are devoted to wisely progressive legislation, and I ask Borab Frazier Maloney Steiwer
tht tmybayb
nisetrt noprtdI h EODBrown
heRCODBulkley
George
Gerry
Binton
Moore
Thomas. Okia,
TrammneU
thti i iseniet icrprae i
as part of my remarks. Bulow Gibson Murphy Vandenberg
The PRESIDING OFFICER. Is there objection? Burke Gore Murray Van Nuys
Thr en oojcin h dtra a ree o~ Byrd Hale Neely Wagner
Threngn becin h eioalwsrdedtbeByrnes Harrison Norbeck Walsh
printed in the RECORD, as follows: Capper
Caraway
Hastings
Hatch
Norris
O'baboney
Wheeler
White
TWENTY YEARS LAT3 Chavez Hayden Overton
By order of the American people the Senate today considers the Clark Johnson Pittmaa
administration's economic-security b)1ll, designed to cushion some Connally King Pope
27,000.000 families against " the major hazards and vicissitudes The PRESIDING OFFICER. Eighty-one Senators having
of life.'"o3 nwrdt hi aeaqou speet
The House speedily passed this important measure, 372 3.anwrdtthrnmeaqou Ispsn.
The Senate would be wise to act with equal dispatch. For none of The question is on agreeing to the amendment Of the
President Roosevelt's " must " measures is more sorely needed, or Committee on page 1. line '1.
more popular. The amendment was agreed to.
The Senate committee's bill Is a decided improvement on the one h etaedetws ndrtesbed"prto
passed by the House. It attacks the social problems of indigent Thneta nd ntwsudrtesbed Opaio
old age, unemployment, blindness, Illness, and childhood de- of State plans ", on page 6, line 14, before the word " no­
pendency. tice ", to insert "reasonable ", so as to make the section
To help the present generation of aged poor, It offers out of the read:
Federal Treasury a subsidy to States of as much as $15 monthly
for each pensioned person past 65. To provide a self-liquidating SEc. 4. In the case of any State plan for old-age assistance
old-age security system for the future. it proposes a Federal re- which has been approved by the board, If the board, after rea­
serve fund into which employers and workers would contribute sonable notice and opportunity Ifor hearing to the State agency
pay-roil taxes to support industry's retired veterans. Finally, It administering or supervising the administration of such plan,
offers to others the opportunity to buy cheap Government an- finds­
nuities. These provisions should help to close the doors of poor- (1) That the plan has been so changed as to impose any age,
houses, which are so costly to the public and so unsatisfactory to residence, or citizenship requirement prohibited by section 2 (b),
the unfortunate Inmates, or that in the administration of the plan any such prohibited
The unemployment Insurance section is frankly an experiment requirement Is Imposed, with the knowledge of SUChr State agency,
In Federal-State cooperation. To encourage the States to enact in a substantial number of cases; Or
unemployment Insurance laws, it provides a Federal pay-roll tax, (2) That In the administration of the plan there Is a failure to
of which 90 percent would be remitted to States with jobless in- comply substantially with any provision required by section 2 (a)
surance systems. States are given wide latitude to try out plans to be Included In the plan; the board shall notify such State
that fit the regional or industrial needs of each, agency that further payments will not be made to the State until
The bill would benefit thousands of needy blind through Fed- the board Is satisfied that such prohibited requirement Is no
eral subsidies to States. It triples Federal appropriations for pub- longer so imposed, and that there is no longer any such failure to
lic health. It revives the infant-mateni'nty care provisions of the comply. Until It is so satisfied it shall make no further certifica­
now lapsed Sheppard-Towner Act, provides funds for rehabili- tion to the Secretary of the Treasury with respect to such State.
tating crippled children, and Increases a hundredfold Federal con- Teaedetwsare o
tributions for child welfare. .Teaedetwsare o
The bill has many defects. Some are due to the need for econ- The next amendment was, under the subhead "Old-age
omy, others to the Supreme Court's rigid limits on Federal Powers. benefit payments ", on page 10, after line 21. to Insert the
The measure does not guarantee security to every family, but It floig
will soften the blows of economic adversity. floig
It is the product of a year's sincere and expert effort. Its in- (d) Whenever the board finds that any qualified Individual has
perfections can be Ironed out later, as other countries have Im- received wages with respect to regular employment after he at­
proved similar measures. tained the age of 65, the old-age benefit payable to such Imdi­
The United States Is 20 years or more behind advanced Indus'. vidual shall be reduced, for each calendar month in any Part
trial countries In adopting a national social-security system., 11"ur of which such regular employment occurred, by an amount equal
ther delay would only add to relief burdens, economic unbalance, to 1 month's benefit. Such reduction shall be made, under regul­
and human fears. latfons prescribed by the board, by deductions from one Or mor
Mr. HARRISON. Mr. President, if there is no Senator payments of old-age benefit to such individual.
who desires to speak on the bill, I should like to have the The amendment was agreed to.
Senate proceed to the consideration of the committee The next amendment was, under the Subhead " Defini­
amendments. tions ", on page 15, line 2, after the word "United ". to
The PRESIDING OFFICER. The clerk will state the strike out "1States by " and Insert "States, Or as an officer
first amendment of the Committee on Finance, or member of the crew of a vessel documented under the
The first amendment of the Committee on Finance was, laws of the United States, by "; after line 9, to strike Out
on page 1. line 7, after the word " financial to strike out "(4) Service performed as an officer or member of the crew
".
 1935 CONGRESSIONAL RECORD--SENATE 9355
Of a vessel documented under the laws of the United states priated for each fiscal year thereafter a sum sufincient to carry out,
Or Of any foreign country"; in line 13, before the word the purposes of this title. The sums Made available under this
"service", to strike out "(5) " and insert " (4) ; in lin 16, section shall be used for making payments to States which have
before the word "service ". to strike out " (6) " and insert submitted, and had approved by the Chief of the Childrens3
Bureau. State plans for aid to dependent children.
"(5)" in line 19. before the word " service ". to strike out The amendment was agreed to.
"M7~ and insert "(6) "; and in line 22. after the word "1puir- The next amendment was, under the subhead"1 State plans
poses ", to insert " or for the prevention of cruelty to chil- for aid to dependent children ", on page 21, line 9, after
dren or animas, ", so as to read: the words " by the "1, to strike out " board " and insert
Sac. 210. When used In this title- " Chief of Children's Bureau "1; In line 13, after the word
(a) The term --wages"- means all remuneration for employment., te" osrk u bar"adisr Sceayo
Including the cash value of all remuneration paid in any medium "te" osrk u or n net
other than cash; except that such term shall not include that an labor "; and in line 14, after the word " as" Sceaya to strike out
of the remuneration which, after remuneration equal to $3.000 has "the board " and insert "he", so as to read:
been paid to an Individual by an employer with respect to employ. .42()ASaepa o adt eedn hlrnms
Ment during any calendar year. Is paid to such Individual by such (1). 40ro (a)dAthatei phallbn fect
ain dpenliticalsudrvisonst
all
emplyer ithrespect to employment during such calendar year. 1 poietaItsllbInfecInlloiialudvos
employer wthr "1employment" means any service, of whtvrof the State, and, if administered by them, be mandatory upon
nature, performed within the United States, or as an officer the; (2) provide for financial participation by the State: (3)
member of the crew of a vessel documented under the laws of theeihrpodefrtesabsmntrdsgainofaigl
UniedStte,
y n mpoye orhis employer. except- State agency to administer
Unitd Sttes by~nient
n eploye
(1) Agricultural labor, or designation of a the plan, or provide
single State agency for the establish-
to supervise the
diitaino h ln 4 rvd o rnigt n ni
(2) seemployera'srtradehooe;vidual.
Domesic whose claim with respect to aid to a dependent child Is
(3)iCasual lao o ntecus ftedenied, an opportunity for a fair hearing before such State agency,
(4) Service performed In the employ of. the United States Glov_ (5) provide such methods of administration (other than those
ermient or of an instrumentality of the United States; relating to selection, tenure of office, and compensation of person­
(5) Service performed in the employ of a State, a political sub- nel) as are found by the Chief of the Children's Bureau to be
divsio
threo, o aninstrumentality of one or more States or necessary for the efficient operation of the plan: and (6) provide
diviion
o anthat heref, the State agency will make such reports. In such form and
(6) Serdviceserormdinheeposo opoain clom- cotining such Information, as the Secretary of Labor may from
munity chest, fund, or foundation, organized and operated exclu- frmtime to time reqirend ncmplry wth asureheprovisionesashmayd
sively for religious, charitable, scientific, literary, or educational fromtimetio tim find necessaryt.suete orcns n
purposes, or for the prevention of cruelty to children or a eriictmnafsuhrsora
no part of the net earnings of which inures to the benefit of any The amendment was agreed to.
private shareholder or individuaL The next amendment was, on page 21. line 17. after the
The amendment was agreed to. word " The ". to strike out " board " and insert "1Chief of the
The next amendment was, under the subhead "pPoisins Children's Bureau 'I; in line 19, after the word I"that", to
of State laws "1. on page 18. line 7, after the word " compen- strike out "it " and insert " he "; and on page 22, line 2,
sation ", to strike out "1solely ", and in the same line, af ter after the word "application ". to insert a comma and "If
the word " State ", to insert a comma and " to the extent Its mother has resided in the State for 1 year immediately
that such offices exist and are designated by the State for preceding the birth ", so as to read:
the purpose "., so as to read: (b) The Chief of the Children's Bureau shall approve anty plan
Sac. 303. (a) The board shall make no certification for payment which fulfills the conditions specified in subsection (a), except
that
to any State unless it finds that the law of such State, approved by he shall not approve any plan which Imposes as a condt­
tion of eligibility, for aid to dependent children, a residence re­
the board under title IX, Includes provisions for- quirement which denies aid with respect to any child residing In
(1) Such methods of administration (other than those relating the State (1) who has resided In the State for 1 year immediately
to selection, tenure of office, and compensation of personnel) as preceding the application for such aid, or (2) who was bornj
are found by the board to be reasonably calculated to insure full within the State within I year immediately preceding the appU-.
payment of unemployment compensation when due; and cation, If Its mother has resided In the State for 1 year imnmedi.
(2) Payment of unemployment compensation through public ately preceding the birth.
employment offices in the State. to the extent that such offices
exist and are designated by the State for the purpose; and The amendment was agreed to.
The amendment was agreed to, The next amendment was, under the subhead " Payment
The next amendment was, on page 19, line 10, before the to States ", on page 22, line 20, after the word "T7he"1, to
word " notice ", to insert " reasonable ", so as to read: strike out " board"1 and insert "Secretary of Labor" and on
(b) Whenever the board, after reasonable notice and oppor- page 23, line 9, after the word "the",. to strike out. board
tunity for hearing to the State agency charged with the admin- and insert " Secretary of Labor ", so as to read:
Istration of the State law, finds that In the administration of theSac. 403. (a) From the sums appropriated therefor the Secretary
law there is- of the Treasury shall pay to each State which has an approved
(1) a denial, In a substantial number of cases, of unemploy- plan for aid to dependent children, for each quarter, beginning
ment compensation to Individuals entitled thereto under such with the quarter commencing July 1. 1935, an amount, which
law; or' shall be used exclusively for carrying out the State plan, equal to
(2) a failure to comply substantially with any provision spedl-
one-third of the total of the sums exptgnded during such quarter
Zled in subsection (a) under such plan, not counting so much of such expenditure with
the board shall notify such State agency that further payments respect to any dependent cjiild for any month as exceeds $18, or
will not be made to the State until the board is satisfied that If there Is more than one dependent child In the same home, as
there is no longer any such denial or failure to comply. Until It is
exceeds $18 for any month with respect to one such dependent
so satisfied It shall make no further certification to the Secretary'
child and $12 for such month with respect to each of the other
of the Treasury with respect to such Stale, dependent children,
The amendment was agreed to. (b) The method of computing and paying such amounts shall
The next amendment was, under the heading "Title ~ I be (1)
as The
follows:
Secretary of Labor shall, prior to the beginning of each
Grants to States for aid to dependent children-Appropria- quarter, estimate the amount to be paid to the State for such
tion ",. on page 20, line 5, after the word I financial ", to quarter under the provisions of subsection (a). such estimate to
strike out "assistance assuring, as far as practicable under be based on (A) a report filed by the State containing Its estI­
the conditions in such State, a reasonable subisistence co-mate of the total sum to be expended In such quarter in accord­
patible with decency and health to dependent childrenl With-co-ance with the provisions of such subsection and stating the
amount appropriated or made available by the State anW lIes poilit
out such subsistence " and insert "1assistance, as far as ical subdivisions for such expenditures In such quarter, and It
pracicale uderthecondtios InSuc Stte. o nedysuch amount Is less than two-thirds of the total sum of such
pracicale
th coditons
nde n sch tat. t nedy timate expenditurs, the source or sources from whilch the
dependent children,", and in line 16, after the word " the I, difference is expected to be derived, (B) records showing the num-n
to strike o~t " board"- and insert " Chief of the Chitlren' ber of dependent children In the State, and (C) such other
Bureau ", so as to make the section read: Investigation as the Secretary of Labor may find necessary.
SEcroN 401. Por the purpose of enabling each State to furnish The amendment was agreed to.
financial assistance,- as far as practicable under the conditions In The next amendment was, on page 23, line 11, after the
such state. to needy dependent children, there is hereby authorized
to be. appropriated for the fiscal year ending June 30, 1936, the word " the '1, to strike out " board " and insert "Secrtary of
suzn of 624,750,000. and Phee Is hereby atoie to be appro- LabJOr "; IXI line 13. after the word "the,"& to strike "Ai
9356 CONGRESSIONAL RECORD-SENATE JUNE 15
"1board" and insert "1Secretary of Labor "; in lIne 15, after The next amendment was, under the subhead "Allotments
the word " which ", to strike out " it " and insert " he "; in to States "; on page 26, line 13, after the word "1State", to
the same line, after the word "that ", to strike out "its" strike out "bears " and insert "1bore ", and in line 14. after
and insert " his "; and in line 20, after the words " by the ", the name "United States ", to insert a comma and "1in the
to strike out " board " and insert " Secretary of Labor ", so latest calendar year for which the Bureau of the Census
as to read: has available statistics "1, so as to read:
(2) The Secretary of Labor shall then certify to the Secretary of SEC. 502. (a) Out of the sums appropriated pursuant to section
the Treasury the amount so estimated by the Secretary of Labor, 501 for each fiscal year the Secretary of Labor shall allot to each
reduced or increased, as the case may be. by any sum by which State $20.000. and such part of $1.800,000 as he finds that the
he finds that his estimate for any prior quarter was greater or less number of live birthe In such state bore to the total number of
than the amount which should have been paid to the State for live births in the United States, In the latest calendar year for
such quarter, except to the extent that such sum has been applied which the Bureau of the Census has available statistics.
to make the amount certified for any prior quarter greater or less
than the amount estimated by the Secretary of Labor for such 'Me amendment was agreed to.
prior quarter. The next amendment was, under the subhead "Approval
The amendment was agreed to. of State plans ", on page 27. line 11. after the word " plan ",
The next amendment was, on page 24, line 1, after the to insert " by the State health agency ". and in line 15, after
words " by the ", to strike out "1board"1 and insert " Secre- the word "1are ", to strike out " found by the Chief of the
tary of Labor ", so as to read: Children's Bureau to be ", so as to read:
SEC. 503. (a) A State plan for maternal and child-health serv­
(3) The Secretary of the Treasury shall thereupon, through the lces must (1) provide for financial participation by the State;
Division of Disbursement of the Treasury Department and prior (2) provide for the administration of the plan by the State health
to audit or settlement by the General Accounting Office, pay to agency or the supervision of the administration of the plan by
the-State, at the time or times fixed by the Secretary of Labor, the
the State health agency; (3) provide such methods of-administra­
amount so certified. tion (other than those relating to selection, tenure of office, and
The amendment was agreed to. compensation of personnel) as are necessary for the efficient op­
The extamenmen
was uner he sbhed "Oeraioneration of the plan; (4) provide that the State health agency wil
oSTate plxtamns dment page2, lined ,fer the worhe
d "Oprthen " maion such reports, in such form and containing such linforma­
ofonpag
Sateplas 24" lie 5 afer he ord11 he , tonas the Secretary of Labor .may from time to time require,
to strike out "board" and insert "Chief of the Children's and comply with such provisions as he may from time to time
Bureau "1; in line 6, after the words " if the ", to strike out find necessary to assure the correctness and verification of such
"boad""Screary
nd nser f Lbor"; ad I lie 7reports; (5) provide for the extension and Improvement of local,
boardand "noetic
Sertayofinsert
" "reasnabe" in line 7 maternal, and child-health' services administered by local child-
before the word 1noie"toisr resnbe1;nlnehealth unite; (6) provide for cooperation with medical, nursing,
19. after the word " the "1, to strike out "1board"1 and insert and welfare groups and organizations; and (7) provide for the de­
"Secetay o Laor";Inqne
1, fterthewor "util velopment of demonstration services in needy areas and among
Secretar the
Lboard"1 andins fert "he " wordin 23ufter',
groups in special need.
to strike out 11tebad"adisr e" nln 3 fe (b) The Chief of the Children's Bureau shall approve any plan
the word " Until ", to strike out " it"1 and insert "1he "1; andwhich fulfills the conditions specified in subsection (a) and shall
in the same line, before the word " shall ", to strike out thereupon notify the Secretary of Labor and the State health
"I"and insert " he ", so as to make the section read:. gnyo hsapoa
SEC. 404. In the case of any State plan for aid to dependent The amendment was agreed to.
children which has been approved by the Chief of the Children's The next amendment was, under the subhead "1Payment
Bureau. If the Secretary of Labor,' after reasonable notice and to States "I, on page 28, line 12. after the word "1beginning"
opportunity for hearing to the State agency administering or etwihheqaercm nig",sasorad
supervising the administration of such plan, finds---t net"wt h ure omnigI.s st ed
(1) That the plan has been so changed as to impose any resi- SEC. 504. (a) From the sums appropriated therefor and the allot­
dence requirement prohibited by section 402 (b), or that in the ments available under section 502 (a), the Secretary of the Treas­
administration of the plan any such prohibited requirement Is ury shall pay to each State which has an approved plan for ma­
Imposed, with the knowledge of such State agency, in a sub- ternal and child-health services, for each quarter, beginning with
stantial number of cases; or the quarter commencing July 1, 1935, an amount. which shall be
(2) :rhat In the administration of the plan there Is a failure to used exclusively for carrying out the State plan, equal to one-half
comply substantially with any provision required by section 402 of the total sulm expended during such quarter for carrying out
(a) to be included In the plan: the Secretary of Labor shall notify such plan.
such State agency that further payments will not be made to the
State until he Is satisfied that such prohibited requirement Is no The amendment was agreed to.
longer so Imposed, and that there is no longer any such failure to The next amendment was, under the subhead "1Operation
comply. Until he is so satisfied he shall make no further certifica- of State Plans "1, on page 30, line 12, before the word " notice
tion to the Secretary of the Troasury with respect to such State. to insert " reasonable "I; so as to read:
The amendamndmtewa wagree nderth sb.a SEC. 505. In the case of any State plan for maternal and child-
The extamedmet
wa, uderthesubhad Adiin.health services which has been approved by the Chief of the Chil­
istration ", on page 25. line 4, after the word "the".~ to dren's Bureau, if the Secretary of Labor, after reasonable notice and
strike out " board"1 and insert " Children's Bureau "1, so as opportunity for hearing to the State agency administering or super­
to read, vising the administration of such plan, finds that in the admIn­
istration of the plan there is a failure to comply substantially with
SEC. 405. Therejis hereby authorized to be appropriated for the any provision required by section 503 to be Included in the plan,
fiscal year ending June 30, 1936. the sum of $2.50,000 for all nec- he shall notify such State agency that further payments will not be
essary expenses of the Children's Bureau in administering the made to the State until he is satisfied that there Is no longer any
provisions of this title, such failure to comply. Until he is so satisfied he shall make no
The amendment was agreed to. further certification to the Secretary of the Treasury with respect
The next amendment was, under the subhead " Defini- oschSae
tions ", on page 25, line 9, after the word " sixteen '1, to in The amendment was agreed to.
sert " who has been deprived of parental support or care by The next amendment was, under the subhead "Approval
reason of the death, continued absence from the home, or of State Plans ", on page 32. line 9, after the word " plan " to
physical or mental incapacity of a parent, and "; and in line Insert " by a State agency "1, and in lIne 13, after the word
14, before the word " residence "., to insert " place of " so as " are " to strike out " found by the Chief of the Children's
to make the section read: Bureau to be "1; so as to read:
Sec. 408. When used in this title- 'SEC. 513. (a) A State plan for services for crippled children must
(a) The term "dependent child" means a child under the age (1) provide for financial participation by the State; (2) provide for
of 18 who has been deprived of parental support or care by rea- the administration of the plan by a State agency. or the supervision
son of the death, continued absence from the home, or physical of the administration of the plan by a State agency; (8) provide
Or mental incapacity of a parent, and who is llving with his such methods of administration (other than those relating to selec­
father, mother, grandfather, grandmother, brother, sister, step- tion. tenure of office, and compensation of personnel) as are neesa­
father, stepmother, stepbrother, stepsister, uncle, or aunt, in a sary for the efficienxt operation of the plan; (4) provide that the
place Of residence maintained by one or more of such relatives as State agency will make such reports, in such form and containing
his or their own home; such information, as the Secretary of Labor may from time to time
(b The term "aid to dependent children" means money pay- require, and comply with such provisions as he may from time to
mients with respect to a, dependent child or dependent children, time find necessary to assuire the correctness and verification of
meaendent
ai gree ~,such
Theamedmetws
aree t. reports. (5) provide for carrying out the purposes specified In
sctin 61; nd 6)provide for cooperation with medIcal, heslib
1935 CONGRESSIONAL RECORD--SENATE 9357
nursing, and welfare groups and organizations and with any agency, The next amendment was, under the subhead "Part 4-­
In such State charged with administering State laws providing for Vocational rehabilitation ", on page 38, line 19, after tile
Vocatioflal rehabilitation of physically handicapped children, word " the ", to strike out "1Federal agency authorl.z&I to
The amendment was agreed to. administer It " and insert " Ofmce of Education in the De­
The next amendment was, under the subhead " Payment partment of the Interior," so as to read:
to States ", on page 33, line 10, after the word " beginning" (b) For the administration of such act of June 2, 1920, NA
to insert " with the quarter commencing "; so as to read: amended, by the Office of Education In the Department of the
ITnterior, there is hereby authorized to be appropriated for the
SEC. 514. (a) From the sums appropriated therefor and the allot- fiscal years ending June 30. 1936. and June 30, 1937. the sumn of
ments available under section 512, the Secretary of the Treasury $22,000 for each such fiscal year in addition to the amount of
shall pay to each State which has an approved plan for services for the existing authorization, and for each fiscal year thereafter the
crippled Children, for each quarter, beginning with the quarter sum of $102,000.
commencing July 1, 1935. an amount, which shall be used exclu­
sively for carrying out the State plan., equal to one-half of the The amendment was agreed to.
total sum expended during such quarter for carrying out such plan. The next amendment was, under the subhead " Part 5-­
The amendment was agreed to. Administration ", on page 39, line 5, after the word " title ",
The next amendment was, under the subhead "1Operation to insert a comma and " except section 531 ", and in line 9.
of State plans, on page 34, line 25, before the word " no- after the word " title "., to insert a comma and " except sec­
tice ", to insert "reasonable ", so as to read: tion 531 '", so as to make the section read:
SEc. 515. In the case of any State plan for services for crpld SEC 541. (a) There is hereby authorized to be appropriated for
ben pprved
chilrenwhih hs y te Ciefof he ripledthe fiscal year ending June 30, 1936, the sum- of $425,000 for alU
Builreau Iftheasbeetary
h ather r
rofeLabor heasonable Children's necessary expenses of the Children's Bureau In amnsengthe
Bureu, f te ofLabr, fte resonblenotice and op-
Screary provisions of this title, except section 831.
portunity for hearing to the State agency administering or super­
vising the administration of such plan, finds that In the adminis- (b) The Children's Bureau shall make such studies and inves­
tration of the plan there Is a failure to comply substantially with tigations as will promote the efficient administration of this title,
any provision required by section 513 to be included in the plan, except section 531.
he shall notify such State agency that further payments will not (c) The Secretary, of Labor shall include In. his annual report
be made to the State until he is satisfied that there is no longer to Congress a full account of the administration of this title, except,
any such failure to comply. Until he Is so satisfied he shall make section 831.
no further certification to the Secretary of the Treasury with re Teaenmn-a are o
spect to such State. Teaedetwsare o
The next amendment was, under the subhead 'State and
The amendment was agreed to. local public health services ", on page 40, line 20, after the
The next amendment was, under the subhead " Part 3- word " regulations ",. to insert " previously ", so as to read:
Child-welf are services"~, on page 35, after line 10, to strike )Protohebgnigfeahqrerftefsclyr
out: the Surgeon General of the Public Health Service shall, with the
Szc. 521. For the purpose of enabling the United States, through approval of the Secretary of the Treasury, determine, in accordance*
the Chlldren's Bureau, to cooperate with State public-welfare with rules and regulations previously prescribed by such Surgeon
agencies in establishing, extending, and strengthening, In rural General after consultation with a conference of the State and Tsr­
areas, public-welfare services for the protection and care of home- rltorlal health authorities, the amount to be paid to each State
less, dependent, and neglected children, and children in danger of for such quarter from the allotment to such State. and shall cer­
becoming delinquent, there Is hereby authorized to be appropriated tify the amount so determined to the Secretary of ths Treasury.
for each fiscal year, beginning with the fiscal year ending June 80. Upon receipt of such certification, the Secretary of the Treasury
1936, the sum of $1,500,030. Such amount shall be allotted for shall, through the Division of Disbursement of the 'Treasury De­
use by cooperating State public-welfare agencies, to each State, partment, and prior to audit or settlement by the General Ax-
$10,000. and such part of the balance as the rural population of counting Office, pay in accordance with such certihcatic r.
such State hears to the total rural population of the United States.
The amount so allotted shall be expended for payment of part of The amendment was agreed to.­
the costs of county and local child-welfare services in rural areas. The next amendment was, undnr the heading "Ti1tle Vir-
The amount of any allotment to a State under this section for any Social Security Board-Establishment ", on page 42, line 13,
fiscal year remaining unpaid to such State at the end of such
fiscal year shall be available for payment to such State under this after the word "1established ", to insert " in the Department
section until the end of the second succeeding fiscal year. No of Labor "; and in line 17, after the word " Senate " to In­
payment to a State under this section shall be made out of Its sert "During his term of rhembership on the board, no
allotment for any fiscal year until its allotment for the preceding
fiscal year has been exhausted or has ceased to be available, member shall engage in any other business, vocation. or em­
ployment. Not more than two of the members of the board
And in lieu thereof to Inrert: shall be members of the same political party ", so as to read:
SEC. 521. (a) For the purpose of enabling the United States,
through the Children's Bureau, to cooperate with State public- SmC. 701. There Is hereby established In the Department of
welfare agencies In establishing, extending, and strengthening, es: Labor a Social security Board (in this act referred to as the
pecially in predominantly rural areas, public-welfare services for "Board ") to be composed of three members to be appointed by
the care of homeless or neglected children, there Is hereby au- the President. by and with the advice and consent of the Senate.
thorized to be appropriated for each fiscal year, beginning with During his term of membership on the Board, no member sahll
the fiscal year ending June 30. 1936, the sum of *1,500.000. Such engage In any other business, vocation, or employment. Not more
amount shall be allotted by the Secretary of Labor for use by than two of the members of the Board shall be members of the
cooperating State public-welfare agencies on the basis; of plans de- same political party. Each member shall receivq a salary at the
veloped jointly by the State agency and the Children's Bureau, to rate of $10,000 a year and shall hold office for a term of 6 years,
each State, $10,000, and the remainder to each State on the basis except that (1) any member appointed to fill a vacancy occurring
of such plans, not to exceed such part of the remainder as the prior to the expiration of the term for which his predecessor was
rUrqJ population of such State bears to the total rural population appointed, shoall be appointed for the remainder of such term;
of the United States. The amount so allotted shail be expended and (2) the terms of offlee of the members first taking office after
for payment of part of the cost of district, county, or othe- local the date of the enactment of this act shall expire, as designated
child-welfare services in areas predominantly rural, and for de- by the President at the time of appointment, one at the end of
veloping State services for the encouragement and assistance of 2 years. one at the end of 4 years, and one at the end of 6 years,
adequate methods of community child-welfare organization in after the date of the enactment of this act. The President shall
areas predominantly rural and other areas of special need. The designate on Of the members as the chairman of the Board,
amount of any allotment to a State under this section for any Teaedetwsare o
fiscal year i'emaining unpaid to such State at the end of such Teaedetwsare o
fiscal year sthall be available for payment to such State under this The next amendment was, under the subhead I Expenses
section until the end of the second succeeding fisc~a year. No of the Board",. on page 43, line 22, after the word " act"0 to
payment to a State under this section shall be made out of Its inert "AppointmentA of attorneys and experts may be made
allotment for any fiscal year until Its allotment for the preceding
fsayerhsbeexaseorhsceae tob vial, without regard to the civil-service laws."; so as to read:
(b tesus
Fo proratdtheref or and teallotments SFzc. 703. The Board Is authorized to appoint and fix the comn­
avalaleunersubecio () heSecretary of Labor shall from pensation of such officers and employees, and to make such ex.
time to time certify to the Secretary of the Treasury the amounts penditures. as may be necessary for carrying out Its functions un­
to be paid to the States, and the Secretary of the Treasury shall, der this act. Appointments of attorneys and experts may be
throidgh the Division of Disbursement of the TreasuryrDeparBt- made without regard to the civil-service law,.
meat and prior to audit or settlement by the Genea Acco--nt.ng
office, make payments of -uch amounts from such allotments at The amendment was agreed to.
the time or times specified by th Sertr of e next amendment was, under the subhead I"Reports
Thor
The amendment was agreed to, on page 44, line 2. after tile word "TheeI to strike o'*
9358 CONGRESSIONAL RECORD-SENATE JUNE 15
"Board"' and insert "Board, through the secretary of or of performed
(4) Service
ernment
in the employ of the United States Gov­
an instrumentality of the United States;
Labor."; so as to read: (5) Service performed in the employ of a State. a political sub­
SEC. 704. The Board, through the Secretary of Labor. ahall make division thereof, or an Instrumentality of one or more States or
a full report to Congress, at the -beginning of each regular ses- political subdivisions:
sion. of the admin'stration of the functions with which It is (6) Service performed In the employ of a corporation, commu­
charged. nity chsfnor foundation, organized and operated exclusively
hartabe, cietifcliterary, or educational pur­
forrelgios,
The amendment was agreed to. poses, or for the prevention of cruelty to children or animals, no
The next amendment was, under the subhead "Deduction part of the net earnings of which inures to the benefit of any
of tax from wages", on page 45, line 14, after the words private shareholder or individual.
"1shall be '". to strike out " made in" and insert " made, The amendment was agreed to.
without interest, In "; so as to read: The next amendment was, on page 52. line 8, before the
(b) If more or less than the correct amount of tax imposed by words " or more "1, to strike out " ten " and insert " four"
section 801 is paid with respect to any wage payment, then, un- so as to make the heading read:
der regulations made under this title, proper adjustments, with
respect both to the tax and the amount to be deducted, shall Title IX-Tax on employers of four or more
be made, without Intcrest. In connection with subsequent wage Teaedetwsare o
payments to the same Individual by the same employer. Teaedetwsare o
t.
The menmentwasagred Te next amendment was, under the subhead " Certiflca.
The as mendent
areedto.tion of State Laws ", on page 53, line 18, before the word
The next amendment was, under the subhead "Adjustment " is ", to strike out " all compensation"1 and insert "1compen­
of Employers' Tax ", on page 46, line 24, after the wordssain"adinle19afrthwod Stetoneta
11
srik ou o" adein an inert" mdecomma and " to the extent that such offices exist and are
hal be",
without interest, in '". so as to read: designated by the State for the purpose "., so as to read:
SEC. 805. If more or less than the correct amount of tax imposed
by section 804 Is paid with respect to any wage payment, then. Sxc. 903. (a) The Social Security Board shall approve any Stats
under regulations made under this title, proper adjusmnts with law submitted to It, within 30 days of such submission, which It
respect to the tax shall be made, without interest, In connection lnspoietht
,with subsequent wage payments to the same Individual by the same (1) Compensation Is to be paid through public employment
employer, offices In the State, to the extent that such offices exist and are
designated by the State for. the purpose;
The amendment was agreed to. Teaedetwsare o
The next amendment was, under the subhead " Collection The amendamndmtewa wagree to. ae5,ln bfr h
and payment of taxes "', on page 47, line 18, after the word Tenx mnmn ao ae5,ln .bfr h
" collections ", to insert " If the tax is not paid. when due, word " notice ", to insert " reasonable "1; so as to read:
there shall be added as part of the tax interest (except in (b) On December 31 in each taxable year the Board shall certify
the aseofmde djutmensn acorancewit th prvi-to the Secretary of the Treasury each State whose law It has previ­
mde n acorancewit th prvi-ously approved, except that it shall not certify any State which,
the aseof djutmens
sions of sections 802 (b) and 805) at the rate of one-half after reasonable notice and opportunity for hearing to the State
per cent per month from the date the tax became due until agency, the Board finds has changed its law so that it no longer'
paid", s o asto
rad:contains asto tothe provisions
such specified
taxable year failedIn tosubsection, (a) or han with
comply substantially With
paid11,
rad:respect
SEc. 807. (a) The taxes Imposed by this title shall be Collected any such provision.
by the Bureau of Internal Revenue under the direction of the
Secretary of the Treasury and shall be paid Into the 'Treasury of The amendment was agreed to.
the United States as Internal-revenue collections. If the tax is The next amendment was, under the subhead " Adminis­
not paid when due, there shall be added as part of the tax interest tration, Refunds, and Penalties "1, on page 58. line 3, after
(except in the case of adjustments made In accordance with the
provisions of sections 802 (b) and 805) at the rate of one-half the word " collections"1 and the period, to insert " If the tax
percent per month from the date the tax became due until paid. is not paid when due, there shall be added as part of the tax
The amendment was agreed to. interest at the rate of one-half of 1 percent per month from
The next amendment was, under the subhead " Defini- the date the tax became due until paid "; so as to read:
tions ", on page 51, line 7, after the word " United "1, to strike SEC. 905. (a) The tax imposed by this title shall be collected by
out " States by "' and insert " St'ates, or as an officer or mem- the Bureau of Internal Revenue under the direction of the Secre­
vessl dcumetedunde th law ofthetary of the ITreasury and shall be paid Into the Treasury of the
ber of the crew of avesldcmneunrthlasote United States as Internal-revenue collections. If the tax Is not
United States, by "; after line 14, to strike out: paid when due, there shall be added as part of the tax Interest at
(4) Service performed by an individual who has attained the the rate of one-half of 1 percent per month froma the date the tax
age of 65 became due until paid.
After line 16, to strike out: The amendment was agreed to.
(5) Service performed as an officer or member of the crew of a The next amendment was, under the subhead " Deflni­
vessel documented under the laws of the United States or of any tions,", on page 60. line 19. after the word "1some "~,to strike
foreign country, out "1twenty"1 and insert "1thirteen "; and in line 23,r after
In line 20, before the word " Service ",. to strike out " (6) " the word " was "1, to strike out " ten"1 and insert "1four"; so
and insert " (4)"1; in line 23. before the word "Service" to~ as to read:
strike out " (7) " and insert " (5)"1; on page 52, line 1, before Sac. 907. When used In this title-­
trie ot "8)"andinsrt
ord"Sevic
the ",to (6) (a) The term "employer " doss not include any person Unless on
thewrd
"ervie", o stik"purposes", tod insert "o for " each of some 13 days during the taxable year. each day being Ina
and in line 4, after the word "proe toist orfrdifferent calendar week, the total number of individuals who were
the prevention of cruelty to children or animals", s3 as to in his employ for some portion of the day (whether or not at the
read: same moment of time) was four or m'.ire
SaC. 811. When used In this titi.- The amendment was agreed to.
(a) The term '1 wages 1' means all remuneration for employment, The next amendment was, on page 61, M~e 22, after the
Including the cash value of all remuneration paid in any medium wr 1proe ,t net"o o h rvnino ret
other than cash; except that such term shall not Include that od"upss" oisr o o h rvniuo ret
part of the remuneration which, after remuneration equal to to children or ainimal"; so as to read:
$3,000 has been paid to an Individual by an employer with respect (7) Service performed in the employ of a corporation, community
to employment during any calendar year. Is paid to such indi. chest, fund, or foundation, organized and operated exclusively for
vidual by such employer with respect to employment during such religious, charitable, scientific, literary, or educational purposes or
calendar yea. for the prevention of cruelty to children or animals, no part of the
(b) The terma ' employment"I eans any service, of whatever net earnings of which Inures to the benefit of any private share­
nature, performed within the United States or as an officer or holder or individual
member of the crew of a vessel documented under the laws of the
'United States, by an employee for his employer, except- The amendment was agreed to.
(1) Agricultural labor; h etaedetws npg 2 ie6 fe h
(2) Domestic service In a private home;Th netaed ntwsonpg62lneafrte
(8) Casual labor not In the course of the employer's tsads or word " compensation " to strike out the comma and insert
bushus; all the assets of -which are rningled and undivided, and in
 1935 CONGRESSIONAL RECORD-SENATE 9359
which no separate account is maintained with respect to any (A) guarantees in advance 30 hours of wages for each of 40
person"; so as to read: caena wes (or more, with 1 weekly hour deducted for each
addedweekguaranteed) -In 12 monthe to all the individuals In
(e) The term " unemployment fund - means a special fund, his employ in one or more distinct establishments, except that
established under a State law and administered by a State agency, any such individual's guaranty may commence after a probs'
for the payment of compensation. tionary period (Included within 12 or less consecutive calenda
The amendment wa gee o wB);ginessecurity or assurance. satisfactory to the State agency.
The next amendment was, on page 62, line 21, after the for the fulfillment of such guaranties,
word "sections ", to strike out `903 and 904" and insert from which account compensation shall be payable with respect
to the unemployment of any such Individual whose guaranty In
903, 904, and 910" so as to read: not fulfilled or renewed and who Is otherwise eligible for coMn­
auxQs AN ensatlon under the 'State law.
pEUAIN
SEC. 908. The Commissioner of Internal Revenue, with the ap- an (4)employer,
The term "yea.. of compensation erperience -, as applied tO
means any calendar year throughout which comn­
proval of the Secretary of the Treasury, shall make and publish pensation was payable with respect to any Individual In his
rules and regulations for the enforcement of this title, except employ who became unemployed and was eligible for compen­
sections 903, 904, and 910. sation,
The amendment was agreed to, The amendment was agreed to.
The next amendment was, on page 62. after line 21, to Mr. LA FOLLE=''. Mr. President, in connection with
Insert:. AL~NZOFADTOA the committee amendment on page 62 and following pages.
SLLOANCZOF
nDITONA. CRDITI think it would be well if I were to ask unanimous consent
SEC. 909. (a) In addition to the credit allowed under section to have printed In the RECORD at this point an explanation
902. a taxpayer may. subject to the conditions ximposcd by section
910. credit against the tax imposed by section 901 for any taxable of that amendment, with which I had intended to acquaint
year after the taxable year 1937, an amount, with respect to each the Senate in case any questions should be asked about It.
State law, equal to the amount, if any, by which the contributions, I ask unanimous consent to have the statement printed In
with respect to employment In such taxable year. actually paid b h EODa hspit
the taxpayer under such law before the date of Miing his return h ECR tthspit
for such taxable year. Is exceeded by whichever the following is The PRESIDING OMFCER (Mr. EBasxLz in the chair)
the lesser- Without obJection. it Is so ordered.
(1) The amount of contributions which he would have been re- 7esaeeti sflos
quired to pay under such law for such taxable year If he bad been Tesaeeti sffos
subject to the highest rate applicable from time to time through- THU CAsE FoR PzRHI~rIo STATEs To Aaorr THE SzPA&ATx RzmzvE
out such year to any employer under such law; or AccOUxT TTPE op UNEM1PLoTMENT-ComFENsATIoN LAw AN~DYom
(2) Two snd seven-tenths per centumn of the wages payable by GiviNG CRxrr To EMpLoxsis WHO HAva RzGuLAaIZE BUMPT­
him with respect to employment with respect to which contribu- HWENT
tions for such year were required under such law. urreRoDcucRoy aTATZ31I?
(b) If the amount of the contributions actually so paid by the
taxpayer Is less than the amount which he should have paid under There are two principal types of unemployment-compensatIon
the State law, the additional credit under subsection (a) shaUl be laws: The pooled unemployment-insurance fund type and the
reduced proportionately, separate reserve account type. In the pooled unemployment-in.
(c) The total credits allowed to a taxpayer under this title shall surance law all contributions are commingled, and payments of
not exceed 90 percent of the tax against which such credits are compensation are made from this common fund regardless of the
taken, cparticular employer for whom the unemployed workmen may
have worked. In the reserve account type of unemployment-
The amendment was agreed to. compensation law the contributions of each employer are kept
The next amendment was, at the top of page 64, to insert: separate for accounting purposes and each employer's account
Is charged only with the compensation payable to his own
CONDITIONS OF ADDITIONAL CREDIT AILLOWANCE employees.
SEC. 910. (a) A taxpayer shall be allowed the additional credit Except for accounting purposes the funds under both types of
under section 909. with respect to his contribution rate under a laws will be handled in exactly the same manner. The em-.
State law being lower, for any taxable year. than that of another ployers will pay their contributions to the State and the Stale
employer subject to such law, only if the Board finds that under will, under the Social Security Act, deposit these contributions In
such law- the United States Treasury, the Federal Reserve bank. or a hank
(1) Such lower rate, with respect to contributions to a pooled designated to receive these deposits by the United States Treasury.
fund, is permitted on the basis of not less than 3 years of coin- The moneys In either case would be kept in an unemployment
pensatlon experience; trust fund in the United States Treasury to the credit of the State
(2) Such lower rate, with respect to contributions to a guaran- and will be invested and Uiquidated as directed by the Secretary
teed employment account, is permitted only when his guaranty of the Treasury. The Secretary of the Treasury will keep one,
of employment was fulfilled in the preceding calendar Year, and account only with each State. If the separate reserve account
such guaranteed employment account amounts to not less than type of law, however, Is permitted, the State will keep accounta
7'A2 percent of the total wages payable by him., in accordance with with each employer, crediting him with his contributions and
such guaranty. with respect to employment In such State In the charging him with the payments made to his own employees.
preceding calendar year; Teoiia cnmcscrt il olwn h eomn&
(3) Such lower rate, with respect to contributions to a separate Then origina eConomiteosEcuritomill following. thermteremend­
reserve account, Is permitted only when (A) compensation has tions the Ctte
ommitte nEooi ido euiyerminth
eplmnttedompeedsa.
been payable from such account throughout the preceding cal.- tion law they wished to enact. It also provided that where
endar year, and (B) such account amounts to not less than five employers have built'up adequate reserves or have had a very
times the largest amnount of compensation paid from such account favorable unemployment experience, the States might permit
within any one of '.he three preceding calendar years. and (C) them, while they maintain such favorable employment record, to
such account amounts to not less than 7% percent of the total make cnrbtosa oe ae hnta eurdfo te
wages payable by him (plus the total wages payable by any other cmpontributind tat aioe rt thathn requanadiioaredifro others
employers who maybecnrbtntoscacot)whrspt the Federal tax for uinemployment-compensation purposes Suhan
to employment in such State In the preceding calendar year. -be allowed such employers equal to the credit granted under the
(b) Such additional credit shall be reduced, If any contribu- State law. A similar provision occurred also in the Wagner-Lewis
tions under such law are made by such taxpayer at a lower rate bill of the Seventy-third Congress.
under conditions not fulfilling the requirements of subsection (a),
by the amount bearing the samae ratio to such additional cemdit -s The House Ways and Means Committee voted to eliminate from
the amou~at of contributions made at such lower rate bears to the the bill the permission to States to have a separate reserve
total of his contributions paid for such year under such law, account type of compensation law. Consistently with this action.
(c) As used In this section- it also struck out of the bill all provisions relating to credits
(1) The term " reserve account"' means a separate account in for employers who have regularized their employment. The
an unemployment fund, with respect to an employer or group of House bill as It came to the Senate Provides that only States
employers, from which compensation Is payable onl with repc which have unemployment-compensation laws of the pooled typ
to the unemployment of Individuals 'who were In the employ of shall be recognized for Purposes of credit against the Federal tax.
such employer or of one of the employers comprising th rop thus In effect compelling all States to adopt this particular type
(2) The term "pooled fund" meansa an unemployment fund or Of unemployment-compensation law. It also contained no r.
any part thereof In which all contributions are mingled an visions for any encouragement to employers to regularize tmhi
undivided, and from which compensation Is payable to all eligible employment.
individuals, except that to individuals last employed by employers The amnendment proposed by the Senate Finance committee to
with respect to whom reserve accounts are maintained by the section 907 (7) (e). restores permission to States toesalhw
State agency, It Is payable only when such accounts are exaAetp fuep~mn-cmest a hyWs.Teney
(3) The term "guaranteed employment account"masa sep- sections 909 and 910 provide for ceist mlyr who have
arate account In an unemployment fund ofectluis paid regularized their employment, ujc ocniin stated Ia
by an emPloyer (or group ul enploYe-a) who sectin 910.
9360 CONGRESSIONAL RECORD-SENATE JUNE 15
ZxpxLAsNATIMO
0o SENATE AMENDMENTS ANM OF OTHER GENERAL whether they wish to have employee contributions or not, what
PURPOSESwaiting period there shall be, what the rate of benefit shall be, the
The amendment to section 907 (7) (e) strikes from the House duration of benefits, and every other feature of a compensation
bill the provision that an unemployment fund established under law except the general type of law they wish to have. Under the
a State law. to be recognized for purposes of credit against the House bill they must have, a pooled unemployment-insurance fund.
Federal tax imposed in title IX, must provide that all assets are though practically all other provisions can be determined as they
mingled and undivided and without separate accounts with respect see fit. This is utterly illogical.
to any employer. Under the House bill all States would be re (2) While there are advantages In IL pooled-fund type of law.
quired to have pooled untemployment funds. With the amend- there are also advantages In a separate reserve account type of law.
ments of the Finance Committee the States will be free to deter- and at this stage there Is no good reason why the States should
mine the type of unemployment-compensation law they wih to not be permitted to have the type of unemployment-compensation
adopt, and whatever typ thyaotwl ercgie o u-law they wish. Ini arguing for freedom of choice for the States with
poses of credit against the Federal tax. This change does not respect to the type of unemployment-compensation law they desire.
compel the States to adopt the separate reserve account type of it Is not necessary to detract from the pooled-flund type of law.
law but permits them to do so if they wish. Good arguments can be made In behalf of this type of law, but
The new sections, 909 and 910. deal with what is called In the there are also valid arguments in favor of the other type.
bil healownco adiioalcrdi.". Section 901 imposes The principal arguments In favor of separate reserve accounts
an excise tax measured by pay rolls (beginning at 1 percent and aetefloig
increasing to an ultimate 3 percent) upon all employers of 10 or (a) Separate reserve accounts furnish a stronger incentive to
moreempoyee,
sate excptins.employers
wth to regularize their employment. Where an employer Is
Section 902 provides for a credit not exceeding 90 percent of thechrewihteosofom nainpyblto okene
tax for payments made to State unemployment-compensation lays off, he naturally will make greater efforts to avoid having to
funds which meet the conditions prescribed In section 903. lay off anyone than under a system where discharges cost him
The new section 909 provides for an additional- credit to em- nothing. Employers cannot prevent all unemployment, but there
ployers who have had a favorable unemployment experience. This is little doubt that many employers can do very much more than
additional credit Is the amount by which they have been per- they are doing through reduced hours of labor when business
mitted to reduce their contributions under the State unemploy- slackens, and other methods.
ment-compensation law. (As an illustration, if the State law (b) A separate reserve account type of unemployment-compen­
permits an employer who has regularized his employment to re- sation law is stronger constitutionally than a pooled type of law.
duce his rate of contribution to 2 percent, he will be entitled to In the recent decision of the Supreme Court In the Railroad
credit against the Federal tax not of the 2 percent he has actually Retirement Board v. Thre Alton Railroad Co., the majority of the
paid during the taxable year but of 2.7 percent-90 percent of Supreme Court laid considerable stress upon the fact that under
3 percent-which Is the maximum credit that he can ever get, the Railroad Retirement Act all funds were pooled and sll rail­
since all employers must always pay at least 10 percent of the roaas were required to make contributions at the same rate regard­
Federal tax.) The additional credit permitted under t'iis section less of the age composition of their employee group. The major­
may be granted under a pooled type of unemployment-compen- ity of the Court held that a system of this kind violated the due
sation law as well as under the separate reserve account type of process clause of the Constitution-amounting to the taking of
law, the property of some railroads for the benefit of the employees of
The allowance of additional credit is hedged in with conditions other railroads. This particular part of the decision of the major­
which are set forth In section 910 and which are designed to ity of the Supreme Court in this case Is not necessarily conclusive
prevent a reduction In the rate of contribution when emp~loyers upon the constirutionality of pooled unemployment-insurance
have not genuinely regularized their employment. Three dif- funds, but does cast doubt upon the constitutionality of such
ferent types of provisions are distinguished, under which em- funds unless provision is made for varying rates in accordance with
ployers may be permitted a reduction in their rates of contribu- the risk and experience of the individual employer. Under the
tion:separate reserve account type of law, each employer pays only for
tion Reue ae fcnrbto ne olduepomn.unemployment among his own, employees. This completely meets
(1)mReducedo rates.ootiuinudrPoe nmlyet the objection of the majority of the Supreme Court to the Railroad
(2) Reduced rates of contribution under separate reserve ac- Retirement Act,
count unemployment-compensation laws. (c) A separate reserve account type of unemployment-compen­
(3) Reduced rates of contribution where employers provide sation law In actual practice Is very likely to provide Just as ade­
guaranteed employment. quate protection to unemployed workmen as a pooled-fund type
The condition prescribed by the reduction of rates of contribu- of law. The major argument in behalf of the pooled funds io
tion of pooled unemployment-insurance laws is that no reduction that they avoid the difficulty of a separate reserve account which
may be made until after 3 years of compensation experience. may become exhausted, and, In consequence, the employees re­
The condition applicable to the separate reserve account type of ceive nothing when they become unemployed. This must be
unemployment-compensation law is that the employer must have admitted as a possibility, but there is no guaranty that pooled
built up a reserve equal to at least five times the largest amount funds will not become exhausted. When pooled funds become
of compensation which has been paid from his account wvithin exhausted, n~t only will the employees In Industries which have a
any one of the three preceding calendar years or equal to at least vast amount of unemployment get nothing, but the employees In
7.5 percent of his total pay roll during the preceding calendar Industries which have had very little will likewise get nothing.
year, whichever is the larger. Under the separate reserve account system, employees in estab­
The conditions under which reduced rates of contribution are lIshments which regularize their employment, or which have low
recognized. where permitted by the State law, to an employer who unemployment rates for any other reason, are almost sure to get-
has guaranteed employment to ,all or some of his employees are: full compensation when they become unemployed. But if there
(1) The period of guaranteed employment Is at least 40 weeks is a pooled fund, employees In such establishments and- Industries
during the year with not less than 30 hours of work during any may get nothing because the employees In less regular establish­
week. (If the guaranty is for more than 40 weeks during the ments and Industries have used up all of the fund.
years, the hours per week may be reduced by the same number as Pooled unemployment-insurance funds are advantageous to In­
the number of weeks of guaranteed work Is increased-i. e., if the dustries and employees which have a great deal of unemployment
guaranty Is for 42 weeks, only 28 hours of work need be given.) but are disadvantageous to employees In plants and Industries
(2) The employer must have actually fulfilled his guarantee, which have a minimum of unemployment, and the reverse of
(3) The employer must have built up a reserve of not less than these statements applies to separate reserve accounts.
7.5 percent of his pay roll in the preceding year, from which com- (3) The provision of the House bill requiring all States to have
,3ensation Is payable to employees in th~e event the guarantee Is the pooled unemployment-insurance type of compensation law
not fulfilled or not renewed, and the emnployee, In consequence, will bar 3 of the 5 unemployment-compensation laws that have
becomes unemployed and Is unable to find other work, already been enacted and compel all progressive employers who
WHY STATES SHOULD BIC PERMrTTrED FREEDOM OF CHOICE WITH axsPEzc have voluntarily set up unemployment-compensation systems -to
TO THE TYPE OF UNEMPLOTME2TT-COXPENSAnoH LAW THEY WISH To abandon their, plans. Of the five unemployment-compensation
ADOPT laws which have been passed to date, those of New -York end
(1) Freedom of choice or permission to the States to determine Washington provide for pooled unemployment-insurance funds
for themselves what type of unemployment-compensation law they without any provisions for separate reserve accounts. On the
wish to adopt Is in accord with the entire theory of the Social other hand, the Utah and Wisconsin laws provide for separate em­
Security Act. The Social Security Act contemplates not dictation ployer reserves in all cases. The New Hampshire law provides for
by the Federal Government but assistance to the States in develop- a pooled fund from which all payments of compensation are
Ing measures of social security. In both Houses of the Congress made but also provides that separate accounts shall be kept with
there has been overwhelming sentiment against provisions giving each employer. These separate accounts are for the purpose of
anyone in Washington authority to teUl the States what they must determining the rates of contribution to be paid by the employer
do. Many standards included in the originiaa bill were eliminated In future years, the New Hampshire law providing that the rates
for this reason. In this particular case, however, the House of contribution shall be reduced after 8 years where employers
deprived the States of freedom of choice. In substantially all other have had a favorable experience and shall be Increased if they
respects'the States are free to determine what sort of unemploy- have had a poor record. The House bill bars this New Hampshire
mnent-compensation law they wish. The conditions prescribed in plan, no less than the Utah and Wisconsin separate reserve so-
section 902 for the approval of State unemployment-compensation count type of law.
laws are not restrictions but merely standards to make certain that The Wisconsin law is the only one now In actual operation. It
the State laws are genuine unemployment-insurance laws and not was passed In 1932 and became effective, with regard to the cot­
mere relief measures. The States are left free to determine lection of contributions, on July 1. 1934. ISine than =ore thea
 1935 CONGRESSIONAL RECORD--SENATE 9361
$5.000.000 have been collected under the Wisconsin law and set Under the pooled-fund type of law, contribution rates may not
aside In separate reserve accounts for the payment of compensation be reduced for 8 years and must then be made on the basis of
to the Unemployed workmen of employers to whom these accounts actual experience. Under the reserve type Of law, contributions
belong. Under the Wisconsin law these payments of compensation cannot be reduced until adequate reserves have been built up.
are to begin on July 1 of this year. and more than $5,000,000 will These reserves must be at least equal to five times the maximum
be available at that time for the payment of claims of workmen amount of compensation that has been payable in any, one of the
Who may thereafter become unemployed. If the Social Security three preceding years. (In other words, an employer must have a
Act should become law In the form in which It passed the House, reserve which would enable him to pay five times the compensa­
Wisconsin. as well as Utah and New Hampshire. will have to scrap tion he has paid In any recent year.) Such reserves In no case
Its unemployment compensation act and begin all over again. The may be less than 7.5 percent of his annual pay roll. With a 3-per­
separate reserves under the Wisconsin law are the property of the cent contribution rate, It Is Impossible for employers to build up a
employers, and the money already collected will have to be re- reserve of this size in less than 3 years. even if they have no
turned to .the employers, the employees In the State lo~sing the unemployment.
advantages of the funds which have already been accumulated. Similarly, guaranteed employment Is hedged In with adequate
The House bill penalizes the progressive employers and the States conditions. Guaranteed employment In effect amounts to putting
which have pioneered. This Is done on the assumption that sep- ordinary workmen on an annual salary basis, which Is the best
arate reserve accounts are inerior to pooled unemployment-in- possible guaranty against unemployment. If everyone were guar­
surance funds. Such assumption Is not based on any actual ex- anteed an annual salary there would be no need for unemployment
Perience, but rests entirely upon theoretical grounds. For Con- compensation. Under section 910 the guaranty must be a sub­
gress to penalize those who have pioneered because. forsooth, what stantial one and must be fulfilled before the employer can get any
they have done does not please some theorists, is a gross injustice credit because of such guaranty. Workmen must be guaranteed
and would have a most retarding effect upon all pioneering toward 40 weeks of employment during the year. and If the guaranty Is
social progress. not fulfilled or renewed, and they become unemployed, the em­
WHY THE FXNANCE COMMr5TTEZ AMENDMENT OH ADDMTONAL cuzorrs ployer must pay unemployment compensation to them on the
TO EMPLOYERS WHO HeAVi REGULARIZED THEIR EMPLOYMENT SHOULD same basis as to other employees. To make certain that he will
BE ADoPEDr have funds to do so. he must have In his reserve account at least
(1) Prevention of unemployment Is very much more important 7.5 percent of his an-lal pay roll before his rate of contribution
than compensation for unemployment. Unemployment compensa- to the unemployment iund may be reduced.
tion can give unemployed workers only a partial wage and for a With these safeguards, It Is rendered certain that the additionsl
limited period. None of the unemployment compensation laws en- credit provision cannot be manipulated to give employers reduced
acted to date gives compensation of more than 50 percent of the rates unfless they have In effect regularized their employment. It
prior wages, and In all or them the duration of payments is strictly is only when they have fulfilled all of the conditions and only
limied.Uneployentcomens'ionis istnctl betertha when the State law permits them to reduce their rates of contri­
nothing, but so long as at least half-time work Is provided the bution that they are entitled to any additional credits against the
employees are better off if they are retained In employment than Feea ta1.
if they are laid off. (Most employees actually prefer earning less Tenx mnmn ao ae6,atrln ,t
money and being kept on the pay roll than being severed there- 7enx mnmn ao ae6,atrln .t
from and drawing slightly more compensation for a limited period.) insert:
(2) Under the Finance Committee amendment, unemployment TIrTrx X-GweNrs To STATES Po& AmDTo THEz Buses
compensation will tend to stimulate the regularization of employ­
ment. without which the reverse effect may result. While em- APPROPRIATION
ployers must pay the same rate of contributions, whether they SECToN 1001. For the purpose of enabling each State to furnish
have much or little unemployment, there Is no Incentive at all to financial assistance, as far as practicable under the conditions in
reduce unemployment. When orders slacken, the natural thing such State, to needy individuals who are permanently blind, there
for them to do Is to discharge employees who are no longer needed. Is hereby authorized to be appropriated for the fiscal year end-
Where employers can save money, on the other hand, through Ing June 30, 1936, the sum of $3,000,000, and there Is hereby au­
regularizing their employment, they may be expected to do every- thorized to be appropriated for each fiscal year thereafter a sum
thing that they can to reduce their costs. When orders slacken, sufficient to carry out the purposes of this title. The sums made
Instead of discharging some employees, they will have a strong available under this section shall be used for making payments
Incentive to reduce hours of labor and to spread their work among to States which have submitted, and had approved by the Social
all of their employees so that they do not have to pay compensa- Security Board. State plans for aid to the blind.
tion from their own accounts to some of these employees. Like­
wise, they will try to eliminate seasonal and other irregularities The amendment was agreed to.
as beat they can. The extent to which they can do so will vary The next amendment was, on page 67, after line 163, to
with different Industries, but ~.nder the stimulus of the possibility insert:
of reducing rates of contribution, it is to be expected that em­
ployers will do very much more toward regularizing employment STATE PLANS1 FOR AID TO THE BLnDD
than they have done heretofore. SmC. 1002. (a) A State plan for aid to the blind must (1) pro.
(3) These provisions carry out the oft-expressed wish of the vide that it shall be in effect In all political subdivisions of the
President that unemployment compensation should promote the State. and, If administered by them, be mandctory upon them;
regularization of employment. Upon this point the President (2) provide for financial participation by the State; (3) either
stated in his message of January 17. 1935, which dealt exclusively provide for the establishment or designation of a single State
with the subject of social security: "An unemployment-compensa- agency to administer the plan, or provide for the establishment
tIon system should be constructed in such a way as to afford every or designation of a single State agency to supervise the adminis­
practicable aid and Incentive toward the larger purpose of em- tration of the plan; (4) provide for granting to any individual.
ployment stabilization. This can be helped by the Intelligent whose claim for aid Is denied, an opportunity for a fair hearing
planning of both public and private employment. @ * More- before such State agency; (5) provide such methods of administra­
over, in order .to encourage the stabilization of private employment, tion (other than those relating to selection, tenure of office, and
Federal legislation should not foreclose the States from establishing compensation of personnel) as are found by the Board to be
means for inducing Industries to afford an even greater stabili~za- necessary for the efficient operation of the plan: (6) provide that
tion of employment.' the State agency will make such reports, In such form and con­
The same thought was reiterated by the President in his fireside taining such information as the Board may from time to time
address on May 5. The views of the President on this subject are require, and comply with such provisions as the Board may from
in accord with sound public policy and accurately reflect the senti- time to time find Ltecessary to assure the correctness and verifica­
ment of the country. tion of such reports; and (7) provide that no aid will be furnished
(4) These provisions relating to additional credit, it is believed, any Individual under the plan with respect to any period with
will strengthen the constitutionality of title IX. Title IX Is be- respect to which he is receiving old-age assistance under the
Ileved to be fairly safe against attack on constitutional grounds, State plan approved under section 2 of this act.
because the offset provision Is modeled directly after the corre- (b) The Board shall approve any plan which fulfills the condi­
sonding provision In the Federal estates tax law, under which tions specified in subsection (a), except that It shail not approve
a credit is allowed (up to 80 percent of the tax) for payments any plan which imposes, as a condition of eligibility for aid to
made under State inheritance tax laws. This provision of the the blind under the plan­
Federal estates tax law was sustained -as constitutional in a (1) Any residence requirement which excludes any resident of
unanimous decision of the United States Supreme Court in a the State who has resided therein 5 years during the 9 yeir.
suit brought by the State of Florida. Nevertheless, the change Immediately preceding the application for aid and has resided
proposed in the FInance Committee amendments will be dis- therein continuously for 1 year immediately preceding the applies..
tinctly helpful in this respect. It will make It clear to the Court tion; or
that contribution rates can be adjusted in accordance with the (2) Any citizenship requirement which excludes any citizen of
risk and experience of each particular employer. This renders Im- the United States,
possible the application of the doctrine of the Railroad Retire- Teaedetwsare o
ment Act case to title IX. 1ea nd ntwsgrdto
(5) Section 911 provides ample safeguards against possible abuse The next amendment was, at the top of page 69, to insert:
of the additional credit provision. As noted above in the ex­
planationl of this provision. additional credits are possible under PAYMEnT TO ITATES
any type of compensation law. In each case, however, these SEm. 1008. (a) Prom the sums appropriated therefor. the Secer­
Credits are hedged in to prevent States from arbitrarily reducing tary of the Treasury, shall pay to each State which. has &1t
contribution rates to favor particular employers, approved Plan for aid to the blind., for echb quarter. beginning
9362 CONGRESSIONAL RECORD--SENATE JUNE 15
with the quarter commencing July 1. 1935. (1) an amount, which Mr. HARRISON. Yes; the entire title with reference to
shall be used exclusively as aid to the blind, equal to one-half annuity bonds,.
of the total of the sums expended during such quarter as aid to
the blind under the State plan with respect to each Individual The PRESIDING OFFICER. Without objectoion the
who is pelinanently blind and is not an inmate of a public Insti- amendment will be passed over.
tution. not counting so much of such expenditure with respect to The next amendment of the committee on Finance was,
any Individual for any month as exceeds $30, and (2) 5 percent o ae8,U
of such amount, which shall be used for paying the coats of onpg 0 ie 5, after the word " title ". to strike out ",x"
administering the State plan or for aid to the blind, or both, and and insert "1 XII ", so as to make the heading read:
for no other purpose. TteX-eea rvsos
(b) The method of computing and paying such amounts shall Til I-erlPovso.
be as follows: The amendment was agreed to.
(1) The Board shall, prior to the beginning of each quarter. Tenx mnmn ao ae8,ln 1 fe h
estimate the amount to be paid to the State for such quarter Thneta nd ntwsonpg 0lie7atrte
under the provisions of clause (I) of subsection (a), such estimate word "'section "., to strike "11001"1 and insert " 1201 no So as
to be based on (A) a report filed by the State containing Its to read:
estimate of the total sum to be expended In such quarter in Sc.10.()Weuedithsa­
accordance with the provisions of such clause, and stating the z 10.()Weusditisc-
amount eppropriated or made available by the State and Its The amendment was agreed to.
political subdivisions for such expenditures In such quarter, and Tenx mnmn audrtesbed"ue n
If such amount is less than one-half of the total sum of such Tenx mnmn audrtesbed"ue n
estimated expenditures, the source or sources from which the Regulations ", on page 81, line 18, to change the section
difference Is expected to be derived. (B) records showing the number from 1002 to 1202.
number of permanently blind Individuals in the State, and (C) Thle amendment was agreed to.
such other Investigation as the Board may find necessary.
(2) The Board shall then certify to the Secretary of the Treasury The next amendment was, under the subhead "BSepara­
the amount so estimated by the Board, reduced or increased, as bility "1, on page 82, line 2, to change the section number
the case may be, by any sum by which It finds that its estimate from 1003 to 1203.
for any prior quarter was greater or less than the amount which
should have been paid to the State under clause (1) of sub- The amendment was agreed to.
section (a) for such quarter, except to the extent that such sum The next amendment was, under the subhead "Reserva­
has been applied to make the amount certified for any prior tion of Power ", on page 82. line 8, to change the section
quarter greater or less than the amount estimated by the Boa~rd number from 1004 to 1204.
for such prior quarter.
(3) The Secretary of the Treasury shall thereupon, through the The amendment was agreed to.
Division of Disbursement of the Treasury, Department and prior The next amendment was, under the subhead " Short
to audit or settlement by the General Accounting Office, pay to Title ", on page 82, line 11. after the word "1Sec.", to strike
the State at the time or times fi-ed by the Board, the amount s out"05 n net"25's st ed
certified, Increased by 5 percent. ot1 05"adisr 251 ,s st ed
'Me amendment was agreed to. Sze. 1208. This act may be cited as the "1Social Security Act.
The next amendment was, at the top of page 71. to insert: The amendment was agreed to.
OPERTION Or STATIC PLANS Mr. HARRiSON. Mr. President. I told several Senators
Smc. 1004. In the case of any State plan for aid to the blind that we should complete consideration of the committee
which has been approved by the Board, If the Board, after reason- amendments today. I wonder if any Senator desires to
able notice and opportunity for hearing to the State agency ad- speak on the bill. I notice the Senator from Oregon [Mr.
ministering or supervising the administration of such plan.' finds- McNARYI is not in the Chamber at the moment.
(1) that the plan has been so changed as to Impose any resi­
dence or citizenship requirement prohibited by section 1002 (b). Mr. FLAETCHER. Mr. President, is the offering of other
or that In the administration of the plan any such prohibited amendments In order at this time?
requirement is Imposed, with the knowledge of such State agency, Mr. HARRISON. The Senator from New York [Mr.
In a substantial number of cases; or
(2) that In the administration of the plan there Is a failure to WAGNER] has an amendment with reference to those who
comply substantially with any provision required by section are blind, to which amendment personally I have no objec­
1002 (a) to be included In the plan- tion.
the Board shall notify such State agency that further payments The PRESIDING OFFICER. Will the Senator from Ne`w
will not be made to the State until the Board Is satisfied that such York send his amendment to the desk?
prohibited requirement is no longer so imposed, and that there is
no longer any such failure to comply. UntUl It Is so satisfied It shall Mr. WAGNER. Will the Chair indulge me for a moment?
make no further certification to the Secretary of the 'Treasury
with respect to such Stats.
'he amendment was agreed to.
The next amendment was, on page 71, after line 21, to
Insert:
ADMENTSTRATION
Sme. 1005. There Is hereby authorized to be appropriated for the
fiscal year ending June 30, 1936. the sum of $30,000 for all neces­
sary expenses of the Board In administering the provisions of this
title.
The amendment was agreed to.
The next amendment was, on page 72, after line 2, to
Insert:
DEFD(ITON
Sm. 1006. When used In this title, the term I aid to the blind"
means money payments to permanently blind Individuals.
The Chief Clerk proceeded to read the amendment begin­
ning on page 72, after line 6, being title XI.
Mr. HARRISON. Mr. President, the Senator from Con­
necticut [Mr. LoNzR;ANII is interested in this matter, and I
have agreed to let that amendment go over. I ask t, t that
amendment be passed over,
The PRESIDING OFFICER. The Chair will ask to which
amendment the Senator refers.
Mr. HARRISON. The amendment on page 72, begin­
ning with line 7. I refer to all of title XI, with reference
to annuity bonds.
The PRESIDING OFFCER. Does the Senator ask that
the entire title shall be passed over?
1935 CONGRESSIONAL RECORD-SENATE 9365

Mr. LONG and Mr. HARRISON addressed the Chair.

The PRESIDING OFFICER. The Senator from Mlssis­
sippi is recognized:
Mr. HARRISON. I offer a proposed unanimous-consent
agreement and ask that it may be adopted.
The PRESIDING OFFICER. The proposed unanimous-
consent agreement will be read.
The Chief Clerk read as follows:
I ask unanimous consent that beginning Monday, June 17. at
3 o'clock p. in., no Senator shall speak more than once or longer
than 15 minutes on any amendment or motion, or more than once
or longer than 30 minutes on the bill H. R. 7260, the so-called
"social-security bill."
The PRESIDING OFFCER. Is there objection?
Mr. LONG. I object. Is there objection to my having the
floor to reply to the Senator from Arizona?
Mr. HARRISON. There are several Senators interested
in having this agreement entered into.
Mr. BORAH. Mr. President, before the Senator from
Louisiana proceeds, permit me to say that the most important
discussion will arise on the amendments. Will not the Sen­
ator therefore change the time so as to give the greater
length of time on the amendments rather than on the bill
itself?
Mr. HARRISON. I have no objection to doing that. I
think there ought to be some kind of agreement. I modify
the agreement so as to provide not more than 30 minutes on
any amendment or motion and not longer than 15 minutes
on the bill.
Mr. McNARY. Mr. President, does the Senator propose
at this time to go forward with his efforts or to suspend
until the Senator -from Louisiana shall have concluded his
remarks?
Mr. HARRISON. The Senator from Louisiana has ob-
Jected. I had been hopeful I might get this matter out of
the way.
Mr. LONG. Mr. President, I hope the Senator from Mis­
sissippi will let me make reply to the Senator from Arizona,
and then he probably can get It out of the way.
I desire to acknowledge my gratitude for the special prep­
aration which my friend from Arizona made with regard to
9366 CONGRESSIONAL RECORD-SENATE JUNE 15
me. I would not have given him a chance to read this mar- Mr. HARRISON. Will the Senator from New York with­
velously concocted written preparation had I not by acci- hold offering his amendment until I can ascertain whether
dent run into the discussion between himself and the or not we can secure an agreement for a limitation of
Senator from Michigan [Mr. VANDENBERG]. I believe he has debate?
me to thank f9 r having brought about the occasion by which Mr. WAGNER. Yes.
his efforts in preparing this eloquent address were not sniped Mr. LONG. What Is the Senator's proposal?
out in some other experiences which might not have given Mr. HARRISON. I have submitted a request for unani­
the Senator from Arizona the opportunity to read his care- mous consent that beginning on Monday at 3 o'clock debate
fully prepared statement. I thank the Senator from Ari- be limited on any amendment--I have changed the time to
zona for this. meet the desire of the Senator from Idaho-to 25 minutes,
The Senator, however, has his facts a littI13 wrong. He and 25 minutes on the bill, and that no Senator be per­
says that during these days of depression, as in the case of mitted to speak more than once, c~r any amendment or on
all stormns, various things are washed up on the sands and the bill.
on the shores; and he says that among other things washed Mr. LONG. Mr. President-
up, I believe, are the catfish, the crawfish, the kingfish, the The PRESIDING OFFICER. Let the Chair submit the
barracuda, and other kinds of fish. The kingfish Is even a request to the Senate. The Senator from Mississippi submits
more vicious species of marine life than the barracuda Itself, a request for unanim6us consent, which will be stated by the
so I am told; but the Senator from Arizona overlooks one clerk.
thing. There is another species that is washed up on the The enrolling clerk (William W. Homne) read as follows:
shores in large numbers, and that is the tadpole. That is It is agreed by unanimous consent that, beginning on Monday,
the animal that I now wish to bring to the attention of the June 17, at 3 o'clock p. in., no Senator shall speak more than once
Senator from Arizona. or longer than 25 minutes on any amendment or motion, or more
The tadpole is a form of life which, during these depres- than once or longer than 25 minutes on H. R. 7260, the social-
sions, goes out and promises one thing and then comes In security bill.
and does another. That species Is far more numerous than The PRESIDING OFFICER. Is there objection?
the kingfish, the whale, the crawfish, the turtle, or any other Mr. CLARK. Mr. President, I have no desire to delay the
form of marine life. If it may please my friend the Senator passage of this bill at all, but I have a rather important
from Arizona, I shall be glad to have him call to mind that, amendment which I desire to discuss on Monday; and while
undertaking to avoid some of the descriptions which he has I shall not desire to discuss it very long at any particular
seen fit to give to the Senate, I have taken the words of our time, it is entirely probable that after I shall have discussed
illustrious President for all the course I have followed here; the amendment there will be a reply on behalf of the experts
not that he was the first to have made the statement, but I who have drafted the bill, and I shall probably desire to
have taken the words of our illustrious President wherein he speak twice on the bill. Under those circumstances I am
said that the people of the United States are entitled to constrained to object, without any desire to delay the passage
share in a redistribution of wealth. Therefore I have used of the bill.
that as my landmark since the political campaign of 1932 Mr. HARRISON. May I ask the Senator from Missouri
ended. what he would suggest in lieu of the proposal as submitted.
Some few days ago, when we had up one of our Important Would a limitation of 45 minutes on the bill and 30 minutes
discussions, I was talking to a friend of mine in this body on any amendment that may be offered be agreeable?
who, during one of his heated campaigns, had sent a tele- Mr. CLARK. That would be entirely agreeable to me so
gram, or his office had sent a telegram, saying that he was far as the time limit Is concerned, except that I might desire
in favor of such-and-such a bill or such-and-such an Issue, to divide up my time. That Is the whole question with me.
and requesting that the fact that he was of that faith be Mr. HARRISON. Then I should like the proposed agree­
speedily communicated to those interested. The telegram ment changed so that In speaking 45 minutes on the bill a
was sent to me, and I discussed it with my friend;, and he Senator shall not be confined to one speech; that he may
said to me, Yes; I suppose that is so." He said, " In the divide up the time he speaks on the bill.
closing days of the campaign, when I am away from my Mr. CONNALLY. Mr. President, the proposed unanimous-
office, and every kind of inquiry Is being shot here and consent agreement provides that a Senator may speak once
yonder, the only safe thing I know to do is to have them all on each amendment and once on the bill.
telegraphed that I am In favor of whatever they telegraph Mr. HARRISON. Yes; that Is true.
for." I could not quarrel with that. as being the attitude of Mr. LA FOLLETTE. Mr. President, I suggest that the sit­
some of my colleagues, because in this changing day of uation which the Senator from Missouri has in mind might
political campaigns I can recognize that with perhaps 90 be taken care of by permitting the Senator to use such time
percent of us that is about the only thing we know how as he desires to use on the bill at different Intervals and
to do. under different recognitions from the Chair, so that If the
For the benefit of the Senator from Arizona, however, Senator had a total of 25 minutes on the bill, and desired to
I will state that I am advocating what I advocated at the speak for 10 minutes, he could reserve the balance of his time.
age of 21. It did not have much support in this body dur- Mr. CLARK. That arrangement would be entirely satis­
ing those days, I am sure. It had little support when I came factory to me.
here. However, it has been advocated by the present Presi- Mr. HARRISON. Then, I ask unanimous consent that,
dent of the United States, and by the ex-President of the beginning at 3 o'clock on Monday, no Senator shall speak
United States, and they are all going to be " exes " until longer than 25 minutes on any amendment-
they either cease making that promise or some of them see Mr. McNARY. No, Mr. President; in view of the absence
fit to keep it. of the Senator from Idaho [Mr. BORftH] and his previous
SOCIAL SECURITY statement, I suggest that the time of speaking on amend­
The Senate resumed consideration of the bill (H. R. ments should be 30 minutes.
7260) to provide for the general welfare by establishing a. Mr. HARRISON. Very well; f' ask unanimous consent
system of Federal old-age benefits, and by enabling the that beginning at 3 o'clock on Monday, no Senator shall
several States to make more adequate Provision for aged speak more than once or longer than 30 minutes on any
persons, dependent and crippled children, maternal and amendment or motion, and that on the bill he shall not
child welfare, public health, and the administration of their speak longer than 45 minutes.
unemployment compensation laws; to establish a Social Mr. CONNALLY. That he shall speak only once and not
Security Board: to raise revenue; and for other purpd~es. longer than 45 minutes?
Mr. HARRISON obtained the floor'. Mr. HARRISON. No: I did not say "1once ' on the bill.
Mr. WAGNER. Mr. President-- That time can be divided UP.
1935 CONGRESSIONAL RECORD--SENATE 9367
Mr. LONG. I think that is all right, with the specific Mr. WALSH. Mr. President, I ask the senator froin
Understanding that the 45 minutes can be divided up as one Mississippi whether It is agreeable to consider at this time
may desire, which will enable one offering an amendment, by two amendments which I have offered.
speaking under his time on the bill, to make reply. Mr. HARRISON. It Is.
Mr. HARRISON. Absolutely. Mr. WALSH. I submit the amendments. which relate to
Mr. LONG. I think that is all right, subparagraph (d) on page 81. The explanation Of the
The PRESIDING OFFICER. Is there objection to the amendments will be found on page 8333 of the Coxa~ts-
request? The Chair hears none, and it is so ordered. EaONAL RECORD of May 28, 1935.
The agreement as entered into was reduced to writing, The PRESIDING OFFICER. The clerk will state th8
as follows: amendments.
Ordered by unantmous consent, That beginning Monday, June The CHIEF CL-nx On page 81. line 12, after the word
17. at 3 o'clock p. in., -no Senator shall speak mare than once or " Federal ". It is proposed to insert the words " or State -.
longer than 30 minutes on any amendment or motion, and not and In line 16. after the word " child '.it Is proposed to
longer than 45 minutes on the bill H. R. 7260. the social security insetapro and srikeottewrsinvlaonfth
bill.erapeid ds eouthwod Invoainote
law of a State."
Mr. WAGNER. Mr. President, I send to the desk three Mr. HARRISON. I have no objection to the amendments,
amendments which simply make more flexible the provi- Mr. McNARY. Will the Senator from Massachusetts
sions permitting the use of some of the funds provided under state the purpose of his amendments?
this proposed legislation for the benefit of the blind. They Mr. WALSH. I will ask the Senator to read with me
are amendments which have been suggested to me by Helen sbeto d npg 1 hc sudrtetteo
Keller. There is no woman in the country who is more in- " Definitions ":
terested in the underprivileged than is that remarkable Nothing In this act ahsfl be construed as authorizing any
woman. Fdrl
I understand that the consideration of these amendments
will require a reconsideration of the votes by which the corn- One of the amendments provides for the Insertion of the
mittee amendments were adopted at the respective places. words " or State"1 in that place, so as to read:
The PRESIDING OF`FICER (Mr. CONNALLY in the chair). (d) Nothing In this act shall be construed as authorizing any
The enaor romNewYor
ask unnimus onsnt hatFederal or State olficial, agent, or representative, In carrying out
ask unnimus onsnt hatany of the provisions of this act, to take charge of any child over
The enaor romNewYor
the vote by which title X was adopted may be reconsidered the objection of either of the parents of such child, or of -tho
in order that he may offer certain amendments. Is there person standing In loco parentis to such child, In violation of the
objection? The Chair hears none. and the vote Is recon- law of a State.
sidered. The second amendment would strike out the last phrase,
The Senator from New York offers certain amendments " In violation of the law of a State.,' Some States have no
which will be stated. such law. The purpose of the amendments Is to conserve
The CHIEF CLERK In the committee amendment, on page the rights of the individual from invasion by State as well
72. at the end of line 6. before the period, it is proposed to as Federal authority.
insert- I may say that the amendments have been presented by
and money expended for locating blind persons, for providing representatives of the Christian Science religion, who feel
diagnoses of their eye condition, and for training and employ- very strongly upon the subject, and I believe many other
ment of the adult blind, religious bodies Join with them in urging that this protection
Mr. HARRISON. Mr. President, I may say with reference of the home is an established principle that should be pre­
to that amendment that it will require no additional money, iserved in this act.
but part of the appropriation made in the bill may be usied The PRESIDING OFFICER. The question Is on agreeIng
for this purpose. The Association for the Blind have made to the amendments.
this request. It seems to me most reasonable, and I hope The amendments were agreed to.
the amendment will be adopted. Mr. ROBINSON. Mr. President, I understand the Sena­
The PRESIDING O'FFICER. The question is on agreeing tor from Oklahoma [Mr. GoRE] desires to present a resolu­
to the amendment offered by the Senator from New York tion. When that shall have been done, with the approval
to the amendment reported by the committee. of the Chairman of the Committee on Flinance, the Senator
The amendment to the amendment was agreed to. from Mississippi [Mr. H&RaxsON], in charge of the pending
The CHIEF CLERM In the committee amendment on page business, I shall move an executive session.
67, after line 16, it is proposed to insert: Mr. GORE submitted a resolution (S. Res. 152), which
Of said sum, each year $1,500.000 or such part thereof as shall appears under the appropriate heading elsewhere In today's
be necessary shall be used in making payments to states of RECORD.
amounts equal to one-half of the total of the sums expended. Mr. VANDENBERG. Mr. President, bef '-e the Senator
Mr. HARRISON. That carries out the same Idea, from Arkansa moves an executive session will he permit
Mr. WAGNER. The same idea. me to submit an amendment to be printed and permit me
The PRESIDING OFFICER. The question is on agreeing to make a brief statement, because I am hopeful that the
to the amendment offered by the Senator from New York Senator from Mississippi can give some consideration to the
to the committee amendment, matter between now and Monday?
The amendment to the amendment was agreed to. Mr. ROBINSON. Very well.
The CHIEF CLERK. On page 68. at the end of line 15, It la Mr. VANDENBERG. Mr. President, the particular amend­
proposed to insert the following: ment to which I am asking the Senator from Mississippi to
(8) provide that money payments to any permanently blind in- give his attention over the week-end deals with a totally
dividual will be granted In direct proportion to his need. and different Phase of the problem Involved in the security
(9) contain a definition of blindness and a definition of needy legislation.
individuals which will meet the approval of the Social Security The argument advanced as to why we cannot paw old-
Board. age pension and unemployment-insurance legislation in the
The PRESIDING OFFICER. The question Is on agreeing States instead of in the Federal Congress is the argument,
to the amendment offered by the Senator from New York that if one State should do it, adding, let us say, to the cost
to the committee amendment. of production or manufacture in that state, it would In­
The amendment to the amendment was agreed to. evttably inure to the advantage of some state which had
The PRESIDING OFFICER. The question now in on not enacted simnilar legislation, and therefore, except as it,
agreeing to the amendment, as amended. Is done uniformly, It may be done prejudicially. I quilte
The amendment, as r~mended. was agreed to. concede that point of view. I wish to know, however.
9368 CONGRESSIONAL RECORD-r-SENATE JUNE 15
whether the point of view does not carry us further and
into the larger unit. This is what I mean: When we passed
the late N. R. A. legislation we included a clause providing
for more or less automatic tariff readjustment whenever in­
creased costs of production precipitated by the N. R. A.
legislation increased the differential between costs of pro­
duction at home and abroad. When we passed the A. A. A.
legislation we included the provision for tariff revision in
the event the costs of production were arbitrarily and arti­
ficially affected in the fashion indicated.
Apparently in the long run the proposed law may in­
crease, by way of pay-roll additions, the costs of production
industrially, in 1940, for example, by a billion six or seven
hundred million dollars a year, and in 1945 may increase the
costs of production, by way of pay-roll additions, nearly
$2,000,000,000.
It seems to me there should be the same automatic pro­
vision in the law for readjusting tariff differentials in respect
to the differences in the costs of production at home and
abroad if, as, and when this demonstrably proves to be
true.
There is still a further reason why I think it is Important
in connection with the proposed legislation. As the Senator
from Mississippi well knows, there has been a substantial
exodus of American plants to foreign countries during the
last decade. Something like 1.800 American industrial in­
stitutions now have branch plants abroad. It occurs to me
that except as we are somewhat careful in protecting this
arbitrary and artificial increase in the costs of production at
home against the competitive advantage abroad we may be
putting a premium upon the further exodus of American
plants into some other jurisdictions where they can escape
these particular burdens. In other words, It seems to me
that precisely the s.ame argument applies to international
competition that applies in respect to interstate competition,
and, since we are answering the interstate competition by
going to the Flederal jurisdiction for our answer, I am s;ub­
mitting an amendment, which I am asking the Senator
from Mississippi to consider over the week-end, which would
provide an authorized approach to the consideration of off­
setting that same differential when it occurs in international
trade. I submit the amendment and ask that it be printed,
and I will appreciate It if the Senator from Mississippi and
his exp-rts will give some consideration to it between now
and Monday.
Mr-. HARRISON. Mr. President, I shall be very glad to
give consideration to it. The matter was not brought to
the attention of the committee. A similar question was pre­
sented in connection with the N. R. A., because it was recog­
nized that there would be increased costs to American pro­
ducers by virtue of the codes. and arrangements which might
be made under them. Whether or not because of this tax the
costs will be so high as to call for legislation I do not know.
I shall be very glad, however, to talk with some of the
experts of the Tariff Commission and with others and give
the matter consideration.
9418 CONGRESSIONAL RECORD-SENATE JUNE 17

SOCIAL SECIT
The Senate resumed consideration of the bill (H. R. 7260)
to provide for the general welfare by establishing a system of
Federal old-age benefits, and by enabling the several States
to make more adequate provision for aged persons, dependent
and crippled children, maternal and child welfare. public
health, and the administration of their unemployment com­
pensation laws; to establish a Social Security Board; to
raise revenue; and for other purposes.
Mr. LONG. Mr. President, I ask permission to send to the
desk an amendment to the pending measure, which I shall
call up today or tomorrow. I ask that it may be printed and
lie on the table.
The VICE PRESI]DE:NT. The amendment will be received.
printed, and lie on the table.
Mr. HASTINGS. Mr. President, I desire to discuss for a
little while certain portions of the pending measure. I desire
to cover briefly those provisions which relate to the granting
of aid to States. Then I desire to call attention to the dis­
criminations in the bill In favor of the old as against the
young, the possible effect of such discriminations, the possi­
bility of maintaining the huge reserve provided for, the cost
of the plan under title III, and, lastly and very briefly, to
title MI relating to unemployment insurance.
I think the social security bill presented to the Senate by
the committee is a very great improvement over the original
bill, known as '5S. 1130."
In my judgment, this bill is the most important bill that
has been presented to this session of Congress. It maps out
for the country an entirely new program. It Is new In three
particulars
First, it is new in the assistance granted to States for old-
age assistance, for aid to dependent children, for aid In
maternal and child welfare, and for public-health work.
The Federal Government has for many years been making
grants to States for the building of highways. There have
 1935 CONGRESSIONAL RECORD-SENATE 9419
been other appropriations made of comparatively small abandoned. in order that I may compare it with other fea.­
amiounts for other purposes, but the large Item has been for tures of the bill which I cannot support.
the Purpose of building roads. I have called attention to the fact that there are three
We are now entering into a field which heretofore has been parts of this bill which are entirely new. I have been dis­
wholly a State responsibility. Effort has been made hereto- cussing only one that Is contained in titles I, IV, V. and VI.
fore to have the Congress give some aid to the States to take and another title relating to the blind.
care of their needy aged people. Many bills have been pre- VEE.OL-AGEDSIT
sented to the Congress having this as their purpose, but the Title II, found on page 7. refers to Federal old-age benefits,
Congress has never acted favorably upon them, and is perhaps the most complicated and far-reaching legis­
This bill comes to us not only as a recommendation of the lation in which the Congress has ever indulged. It is an
President of the United States, but comes at a time when the effort to write into law a forced annuity system for a certain
recollection and distress of the depression Is fresh in our class of persons. My recollection is that It affects about 50
minds and the existence of such distress is still in our very percent of the persons who are gainfully employed. There
midst. More than that, it comes at a time when the indi- wi~ll be found on page 9 of the majority report a table which
vidual States are laboring under a strained financial condi- shows that in 10 years there will be accumulated in this
tion, with many of them believing that they cannot take care reserve fund a little less than $10.000,000,000, In 18 years a
of their own. This feeling upon the part of the State au- little more than $22,000,000,000, and In 43 years the balance
thorities undoubtedly is partially due to the precedent of the in reserve will be something like $47,000,000,000. The ac­
Federal Government in furnishing huge sums of money to cumulation of this amount of money in a democratic form
take care of the needy in the States. That it was necessary of government like our own is unthinkable.
for the Federal Government to do something along this line It must be remembered that this effort to create an old-
is admitted by all; the question which has caused much age reserve account to take care of all persons in the future
debate in and out of Congress is the plan and method is not a contract that can be enforced by anybody. What we
employed in giving such aid. do here is merely to pass an act of the Congress, which may
The conditions which I have recited and the precedent be changed by any Congress in the future, and has in it noth­
we have established make it exceedingly difficult to OPPOSe ing upon which American citizens can depend. Does any­
this part of the pending bill. I have, after much considera- body believe that such a huge sum of money, accumulated
tion, reached the conclusion that it is necessary to support for any purpose, could be preserved intact? Does anybody
these grants to the States for the purposes set out in the doubt that it would be subjected to all kinds of demands? I
bill. In doing so I do not overlook the great dangers which can think of nothing so dangerous as an accumulation of
such action on our part at this or any other time will bring the huge sulm of $47,000,000,000 for the purpose of taking
to the principles upon which our Government was founded. care of persons who have not yet arrived at the age where
When the Federal Government adopts as a permanent they can participate in the fund.
policy a plan to contribute from the Federal Treasury any It must be borne in mind in this connection that this huge
substantial sum for the care of the needy people of the fund will have been accumulated for the purpose of taking
States it immediately begins breaking down the independ- care of only about one-half of the persons who will have been
ence of the States by making them more responsible to a gainfully employed.
centralized government. There will be found in the majority report. on page 9, this
I do not protest, for a protest would be of no avail. I very significant statement:
yield, as every elective legislator must yield under our form To reduce the cost of free pensions for these groups In the popu­
of government, to what I believe to be the demand of the lation, we deemed It desirable that the bill should Include provi­
great majority of the people of every State. sions for annuity bonds to be issued by the Treasury.
I should not be so much disturbed in consenting to the I think this statement Is somewhat misleading. The refer­
grants set up in the bill for the purpose mentioned if I knew ence is made to title XI, which provides that the Federal
that the precedent thereby fixed by the Congress would not Government may issue annuity bonds. The statement is
be enlarged upon by the Congresses that are to follow. I made in the report that It is believed that such authority
know, however, that this is only the beginning; and I know to issue annuity bonds will reduce the cost of free pensions
that the same public sentiment which supports this much for the persons who are not included In the other plan.
of the program will continue until the amounts which are There can be no hope, In my judgment, of this accomplishing
to be granted by the Federal Government will be increased any such purpose.
and the scope of the relief greatly enlarged. This demand I may say in that connection that, so far as r know,
will continue from time to time until it will become such aL there Is no particular advantage in annuities of this kind
burden upon the American people that the increasing or over annuities of the kind which have been issued by in­
decreasing of the amount will become a serious political surance companies in the past, and are being issued today.
Issue. If it be true that the annuity plan suggested In the bill
The only hope left, In my judgment, is that the Congress will take care of one-half of the people who are not now
shall confine itself always to doing for a State and for the being taken care of, It seems to me we might very well
people of the State only so much as that State does for apply it to the entire class that is to, be taken care of.
itself and its own people. In other words, the only safety ]DISCRIKINATIOND
we have in this new program is through making certain Now, Mr. President, in some detail and perhaps with some
that the State does its full share. If we stick to that tediousness I shall point out some of the discriminations In
principle, we may save ourselves from some of the serious the bill, and I do it for more than one reason. I do it not
consequences that otherwise will come out of this plan. only for the purpose of -showing the unfairness of the bin
Of course, Mr. President, there is nothing in this plan itself but for the purpose of calling to the attention of the
that Is so complicated as to prevent it from being easily Senate what some future Congress will need when faced
abandoned It and when the country so recovers from the with the discriminations which Will be practiced under the
depression that such contributions on the part of the Fed- bflL.
eral Government are found to be unnecessary. In other r think It desirable to Point out the many dis~crimination,,
words, we may treat this matter at the present time under They are against the young man and in favor of the older
this plan as an emergency, which may or may not develop man. In my comparisons, unless otherwise stated, I Shall
Into a permanent policy, all of which, including the amount assume that the wage received Is $100 per month in each
of the appropriation, would depend upon the conditions Instance, and that the employee makes funl time.
existing from year to year. Under the plan as set out in the bill at the bottom of
I say with perfect frankness that I have but little hope page 9, if a man begins to pay in January 1. 1937, and
that the plan would be a'andoned for the reasons Ibhave paysin for 5years, he winhave paid onaneaned onme
stated. I merely Point out the ease with which It could be of $8,000. In order to find out how much be get. eaeh
 9420 CONGRESSIONAL RECORD--SENATE JUNE: 17
month we take one-half of 1 Percent of the first $3,000, will Purchase an annuity of $55.82 a monto $669.84 per
which makes $15 per month, and we take one-twelfth of 1 Year, or a total for 12 Years of $8,038.08. Utnderr the planher
percent of the other $3,000, which makes $2.50 per month, would get $53.75 per month, or $645 a year. and for a period
or a total of $17.50 per month. If this man is 60 years of of 12 Years would receive $7,740. The persons this class
age when he begins to pay in, he may retire at the age of would, therefore, get $298.08 less under the planin than they
65 and get $17.50 per month, would have coming to them from the ordinary life-insurance
There has been contributed for him and by him during annuity.
these first 5 years $144, being 2 percent for the first 3 years, Let us take another illustration, and suppose that a man
and 3 percent for the next 2 years. If this sum were paid does not reach the earning age until 1949; 1949 is the year
to an insurance company, it would purchase an annuity of In which the full tax becomes effective. He does not begin
$1.11 per month. to pay in until he Is 20 years of age, In 1949, and under the
The mortality table shows that a man 65 years of age Is plan he pays In for 45 years. During that time he will have
expected to live for a period of 12 years. earned $54,000, and under the plan will be entitled to $53.76
If we should take the $17.50 per month allowed him under per month, or $645 a year, and for 12 years will receive a total
this bill, he would be paid $210 per year, and for a period of $7,740. There will be paid in for him and by him $3,240;
of 12 years It would amount to $2,520. If we should place which will purchase him an annuity of $68.50 per month, or
it upon a sound basis, however, and pay him $1.17 per $822 a year, which over 12 years would make a total in pay..
month, he would receive $14.04 per year, or a total for the ment to him of $9,864. Under this plan he gets only $7,740,
12 years of $168.48; so that particular person, whether he and therefore loses $2,124.
be in need or not, would get from some source $2,351.52 As I have said, all of the illustrations I have given have
more than the money contributed by himself and his em- been based upon a salary of $100 per month. But let me
ployer would earn. emphasize that illustration by taking the man who reaches
Take another instance, and assume that the man who the earning age in 1949, who earns $250 per month, and
goes in on January 1, 1937, is 55 years of age. It will be pays under the plan for a period of 45 years. During that
observed in the majority report on page 8 that that man time he will have earned $135,000, and under the plan will
will be entitled to $22.50 per month. During the 10 years be limited in pension to $85 per month, or $1,020 a year; and
he will earn $12,000, and there will be paid in by him and if he lives out his expectancy, he will receive $12,240. There
for him $384. That $384 with interest at 3 percent will will be paid in for his account, however, the sulm of $8,100,
purchase an annuity of $3.76 per month. If he lives for 12 which, with interest compounded at 3 percent, would pur­
years and draws $22.50 per month, or $270 a year, he will chase him an annuity of $171.25 a month, or $2,055 per
receive $3,240. while if he only drew the amount that the year, which over a 12-year period would give him a total of
$384 and interest at 3 percent would provide, namely, $3.76 $24,660. Under the plan he would get $12,240, so that there
per month, or $45.12 per year, he wouid draw $541.44, a is a difference of $12,420 which the young man, who
difference of $2,698.56 for each particular person in that in in 1949 and pays in for a period of 45 years and starts
class, earns
during the whole of that time $250 per month, will lose.
But let us take the man who goes in at 50 years of age PAM UPO DYATH
and pays in for 15 years. There will be paid In by him and
for him $720, and this sum will purchase an annuity of $7.67 W(. President, let me call attention to another discrimi­
per month, whereas under the plan of the bill he would be nation, with respect to the payments upon death, which will
entitled to $15 per month on his first $3,000 of earnings and be found on page 11 of the bill. Section 203 provides that
$12.50 per month on the balance of his earnings, or a total for any person dying before the age of 65, his estate shall
of $27.50 per month, or $330 per year; and assuming that he be entitled to 3Y2 percent of the total wages paid to himi
lived for a period of 12 years he would draw $3,960; while ater December 31, 1936.
his annuity of $7.67 per month, or $92.04 per year, for a If a man, therefore, enters this plan at the age of 60
period of 12 years would make a total of $1,104.48, which and earns $1,200 per year for 5 years, he will have earned
amount deducted from the $3,960 under the plan leaves a total of $6,000. If he dies Just as he reaches the age of
$2.855.52, which must be Paid from some other source to 65 his estate will be entitled to have paid to it a lump sum
every person in this particular class, regardless of whether of $210.
or not he is in need. The amount this particular employee has paid In, plus
But suppose he goes in at 35 years of age, and payments the accumulated interest at 3 percent, will only amount to
are made by him and for him foi, a period of 30 years. For $76.92, making an overpayment to the estate of $133.08.
the first 15-year period the amount paid in amounts to $720, If he has been in the plan for 15 years, the amount his
but for the next 15-year period the rate is uniform at 6 per- estate will receive will be $630, while the amount
cent. The additional amount, therefore, paid in that could by him with accumulated interest will equal only paid in
$432.72,
be used to purchase an annuity would be $1,080, making a making an overpayment of $197.28.
total of $1,800. Under the plan he. gets $42.50 per month, or If he has paid in for a period of 25 years, his estate
$510 per year, and assuming that he lives 12 years, and, of will receive $1,050, while the amount he has paid in with
course, it may be more or less, he would receive a total of accumulated interest will be only $999.60, making an over­
$6,120. The annuity that could be purchased for him with payment of $50.40. So the only person who is treated with
$1,800 that has been paid in for him and by him would entire equity is the man who has paid in for 25
amount to $25.72 per month, or $308.64 a year, or a total of dies. His estate gets back just about what it isyears and
planned
$3,702.68. This subtracted from the amount that he would Ought to be gotten back.
get under the plan leaves a difference of $2,417.32. If he pays in for 35 years, however, his estate will receive
Assuming that the man goes in at the age of 25 years and only $1,470, and the amount he has paid in plus the accumu­
pays in for 40 Years, there will be paid in by him and for him lated interest will amount to $1,761.72, showing a loss
to
$2,520, and this sum will Purchase an annuity of $44.10 per the estate of $291.72.
month, or $529.20 a year. Under the plan he would be en- I may call attention to the fact that these figures are
titled to $51.25 per month, or $615 per year, or a total of based upon what the employee contributes, and have noth­
$7,380, if he lived out his expectancy. The annuity that ing to do with what the employer contributes,
could be purchased for him. would be $529.20 per year, or If he pays In for 45 years and dies Just at the age of 65,
$6,350.40, leaving a balance that must be made up from some his estate will be entitled to $1,890 under the plan, while
source of $1,029.60. It will be observed that even if he goes amount he has paid in plus the accumulated interest will the
In at 25 years of age he still gets an advantage of $1,029.80 amount to $2,785.92, showing a loss to his estate of $895.92.
If everything happens that is expected to happen. The above illustrations are based upon the assumption
Ifamnge na h g f2 er n asi o that he began to payin at the end of193s, when the rates
45 years, there will be paid for his account $2,880; and that would be less than the maximum for the first 12 years.
 1935 CONGRESSIONAL RECORD-SENATE 9421
If We take the illustration of a man who starts to pay In tributed by his employer. He will say, and In many In­
in the Year 1949 and pays in for a period of 45 years, we will stances It will be true, that he did not get enough PaY
find that his estate Is entitled to the same $1,890, although anyway, and that, therefore, he has gotten no more from
the amount the employee has contributed to the fund with his employer than he was entitled to. However, the young
its accumulated compounded interest would amount to man who will go under this plan in 1949 and pay in for a
$3,383.52, showing a loss to his estate of $1,493.52. period of 45 years on a salary of $250 per month will find
I have called attention to the fact that the youth who when he reaches the age of 65 that under this plan he can
enters this plan in 1949 and pays in for a period of 45 years draw only $85 per month, while it that same fund had been
and retires at the age of 65 and then lives out his expectancy placed in the hands of some insurance company or had been
of 12 years, will receive under the plan only $53.75 per placed in the hands of any person who had invested It at
month, while if the same amount had been paid in on some 3-percent interest, and the 3-percent Interest had accurnu­
annuity plan he would receive $68.50 per month, making a, lated until he had arrived a the age of 65 years, instead of
total loss to him during the 12 years of $2,124. getting $85 a month he would get a little more than $172
The samne youth is penalized if he should pay In for 45 per month.
Years and then dies at the age of 65. in that his estate would When he goes to his Member of Congress and sets forth
receive only $1,890, whereas the amount that he has paid in those facts and shows how hard he has worked all these
with accumulated interest would be $3,383.52, or a difference years, and how this money has been accumulated for him,
of $1,493.52, so that if he lives for 12 years, or until he is 77, and shows how in 1935 the Congress. when it enacted this
and draws his pension, he has a loss of $2,124, while if he law, enacted it In this form, because it was sa~d Congress
dies at 65 before beginning to draw his pension his estate is could not afford to do better than that which Is now under­
out $1,493.52. taken to be done, that Is, to tax that youth of the future in
This discrimination is further emphasized if, instead order to take care of the older man of today-when he sets
of taking a figure of $100 per month as the wage earner's forth those facts, I say that his claim winl be so Just, his
pay we take $250 per month. I have shown that in such a claim will be so fair, that no Member of Congress winl dare
case if the man lived and drew his pension under this plan, turn him down, and we shall hnave that question confronting
instead of drawing what he would be entitled to under a us, just as we have today such a question confronting us in
regular annuity contract, he would lose $12,420. If the same the matter of the soldiers' bonus.
$250 per month man, however, pays in for 45 years and dies The soldier says, " We went to the war and we fought for
just as he reaches the age of 65, his estate would get back America; we defended America while other youths at that
$4,725, while if the same amount of money had been paid time remained home and were earning large sums of money."
in under an annuity contract, his estate would be entitled What do we say In reply? We cannot deny what he says.
to get back $8,458.50, showing a loss to his estate of $3,733.80. We cannot deny that he earned much more than he received.
DISCMUNTIOS
INAMONT r BLARIZ'SVMCrV=The only reply we can possibly give to him Is, "My dear
DiSCIM~ATINS
r hMU~T0? ALAIISfellow, you cannot expect America to pay you for your patin­
A like discrimination is made between persons getting low otism. It is impossible. There is not enough money in
salaries and persons getting higher salaries. The bill favors America to pay It. There is not money enough in the world
the man with low earnings against the man with higher to pay the soldiers what they actually earned or what Is due
earnings. to them, if you put it upon any such basis as that."
Take the Illustration found in the report on page 8. It So, because we promised him a bonus he comes to the Con­
will be observed that a man who has paid in for 10 years gress and says, " We need the money now, and you ought to
on the basis of $50 per month will receive a pension of pay it in advance." We cannot say, " You did not earn it.'
$17.50, and that $17.50 to a man who has received a We cannot say, " It Is not proper to pay you in advance
wage of $100 per month is increased to $22.50, and it in- because you did not earn that much money." We have no
creases $5 for every $50 per month increase in Pay up to defense except to say, "1We have agreed to do a certain thing
$250 per month. So that the man who earns $250 per for y..u because of our great appreciation of what you did.
month or five times as much as the man earning $50 per and we are going to limit it to that, and that is not yet due ";
month, will receive only a fraction more than twice as much and upon that ground we defend our position, and that is the
as the man who receives $50 per month. It must be borne only ground upon which we can defend Kt.
in mind also that the man who has been receiving five times However, when the young man who will be 20 years of age
as much salary and who gets only twice as much in the form in 1949 shall come to the American Congress with a certifi­
of a pension has all of the time been paying five times as cate showing what has been paid in for his account, and he
much in taxes, shall show to the Congress not only that, but will be able 'to
Mr. President, I call attention to the discrimination in this say to the Congress, " If this money had been invested prop­
bill not so much for the purpose of emphasizing the argu- erly there would be comning to me now for the balance of my
ment which will be made by those who shall participate in life $172 a month instead of this paltry sum of $85 a month
this fund, who pay the taxes, and who are entitled uilti- which you expect to give me now "1, when the Congress will
mately to some return from It, but I call attention to it for have no defense to it at all. We will have no defense at all,
the purpose of emphasizing that, after all, this is a demo- because he will not have gone into this plan voluntarily.
cratic form of government and what we do here may be We will have forced him into this plan. We will have forced
changed and will be changed upon the demand of people him to contribute to the Federal Treasury 3 percent of his
who have been discriminated against. salary and will have forced his employer to do likewise. Per~­
I de- iot overlook the suggestion made by the distinguished haps all he can pay Out of his salary is 3 percent; perhaps
Senator from Wisconsin [Mr. LA FOLLETTE] the other day that Is all he can spare, and perhaps it is all the employer
in response to a question I asked the chairman of the com- can do for the employee; but instead of leaving it to him to
mittee, or in response to the suggestion which I made to make with some organization a binding contract which would
the chairman of the committee as to the discriminations. I enable him, If he lived to be 65 years of age, to get $172 a,
do not overlook the fact that a part of these funds are being month, and which, more than that, would enable him when
paid by the employer and that the employee has not con- the time o! need came to borrow money, to take part of his
tributed all the money which I have placed to his account. profit, at 60 years of age Instead of 65. all under a binding
That is quite true indeed, but it Is not an answer at all contract, to which the careful youth and his Parents and the
to the point which I make and to the questions which I employer had been looking to take care of him in the future,
raise. The employee under this plan will either weekly, we force upon him a plan of which he has no notion whether
monthly, or yearly, whatever the plan provides fer, have It will be lived up to or not. He does not know whether it
in hie possession some evidence of what has been placed will last 5 years or 10 years. He does not know whether it
to his credit by the Federal Government. It will make no will last until he is 65 years of age. He does riot know what
difference to him whether or not a part of It has been con- minute Congress is going to cut him off.
9422 CONGRESSIONAL RECORD--SENATE JUNE 17
M~r. President, I suggest that that Is a serious question, would not be accumulated -but would be used for current
which we ought to consider before we pass on this difficult expenses of the Government?
problem to some Congress in the future. Mr. President, we have a fine example of that-very
Mr. KING. Mr. President, will the Senator yield? slight, indeed, because of the amount involved-in the cs
Mr. HASTINGS. I yield, of the civil-service retirement fund. I wonder if Senators
Mr. KING. I ask the Senator a question for information, realize that, while there is supposed to be something like
In the figures which he has been presenting to us has he a billion dollars accumulated in that fund and that the
taken into account the fact that the payments which are actuaries say there ought to be about a billion dollars ac­
made are made both by the employer as well as by the em- cumulated in It, there has been practically nothing accumu­
ployee? Assume that there was no payment made by the lated in that fund? I blame no particular person for it; I
employer, but only by the employee, is not the amount which know when the Government needs money for some purpose
he would receive under the bill commensurate with the the question may readily be asked why should not the Gov­
amount which he would pay? The Senator has been debat- ermient, when it needs money for other purposes, take out
ing it upon the theory that it is the equivalent of the em- of its till and put in some other place a certain sum of
ployee making both payments, but the master pays part and money that is necessary for some retirement fund? There
the employee pays part. However, it all inures to the em- is nothing in the civil-service retirement fund except an
ploye's dvanage.I 0 U. Of course, the I 0 U is Perfectly good; nobody
piryeeASadana NS e, . questions that; but I call attention to the seriousness of
Mr. HASING.S.pYes.n htteSnto hudbs i the situation when it reaches the sum of $47,000,000,000.
Mr. ING hattheSentorshold
Suposng asehis May I inquire whether it is recognized to whom this
computation upon the proposition that the employee should $47,000,000,000 will go? Who is to be in charge of that
be entitled only to the benefits which would come from his fund? It is estimated that the Persons interested in it will
payments, what then would be the result? be about 50 percent of the people who are gainfully em­
Mr. HASTINGS. Of course, all the figures I have men- ployed; so somewhere between 25,000,000 and 30,000,000
tioned as being paid in under regular annuity would be re- voters of this Nation will be entitled to that $47,000,000,000.
duced by 50 percent, because the employee pays only half In this democratic form of goverrnment, does anybody think
and the employer pays half. However, I may suggest, Mr. that the Congress can resist the demands of those 25,000,000
President, that I think this discrimination shown in the bill people with respect to that $47,000,000,000 of money? If we
is a serious one. I say in response to the suggestion made should ever be fortunate enough to accumulate any such
by the Senator from Wisconsin [Mr. IA FOLLETTE] that it is a fund as that, does anyone doubt that there would be pro­
serious discrimination. If we admit, as we must admit, that posals in the Congress to loan to the persons interested cer­
the youth of today must be penalized in order to take care tain sums from the amount that has been accumulated?
of the older persons of today, and if there be anything in the Does anyone doubt that there would be formed all over this
suggestion that the youth cannot complain, because his em- land organizations that would want the Congress to
ployer is contributing a portion of the money, then we had give them a part of that $47,000,000,000 before they reached
better modify this bill so that there shall not go to the credit the age of 65? Think for a moment of what would happen
of that youth the amount which the employer pays for him, in this land of ours if 25,000,000 people at the time the de­
In other words, it is provided that a total of 6 percent shall pression hit us had in the till somewhere, $47,000,000,000.
be paid in when the act shall become fully effective; 3 per- Does anyone doubt that such a demand would have been
cent by the employer and 3 percent by the employee. if it made upon the Congress as would have destroyed the greater
be said that it is necessary to have such discriminations in portion of that fund?
order to take care of the aged people of today, then we had Mr. President, I submit that in a democratic form of gov­
better change this bill so that there shall not go to the ermnent where a fund is created for the benefit of twenty-
credit of that youth the entire 6 percent. Give him credit five or thirty million people Congress itself would be as help­
for the 3 percent which he contributes, and give him credit less as a child, because the man who should not respond to
for 1 percent contributed by his employer, if that is all that the demand of a group of voters such as that would simply
can be done, or give him credit for 2 percent contributed by give way to another man who would respond. That has
his employer, but whatever we do let us not deceive that been common experience in this country, and could be
youth by making him believe that here is an annuity plan demonstrated by precedent after precedent.
whereby he is contributing 50 percent and his employer is Mr. President, I do not wish to take a long time discus­
contributing 50 percent, and that it goes to his credit, when, sing this matter, but I'should like to bring some of the facts
as a matter of fact, part of it is taken from him in order that to the attention of the Senate in order that we may better
we may take care of the older people of today. realize just what we are getting into. I desire to call atten­
I think that one of the finest things that could come to tion to the cost of this plan. There has been placed on
this country would be a combination annuity plan under the desk of each Senator, I think, a copy of the " Data
which the employer and the employee would contribute a requested of the Secretary of the Treasury by Senator Jsss:
like amount in order to take care of the employee in his H. METCALF and submitted by the Railroad Retirement
old age. But if we do it, we ought to do it upon a straight Board on June 4, 1935." It is my understanding that this
and fair basis where every man who is an employee and is an official statement of the cost of this proposed plan.
pays in and every employer who pays in for him should be I desire to call attention to certain figures which are
given credit for all the sums of money paid in on the em- supplied in the tables submitted. It will be observed In
ployee's account. I think the discriminations here are so column 7 that without title fl-that is, taking the grants
serious that we ought not to pass mu~ch of this measure at and aids to States on condition that the States will con­
this time; I think they are so serious that we might well tribute as much as the Federal Government contributes, by
afford to give many months study, and, perhaps, years of 1980, or a period of some 43 years, there will have been
study, before we enter into any such plan. expended $39,059,600,000 during that 43-year period. That
Now, Mr. President, I want to discuss for a few moments figure has been described by certain Government officials as
the possibility of creating or maintaining any such reserve being shocking, and It has been stated that we cannot afford
fund as is here contemplated. It must be borne In mind any such scheme as that.
that in order to create this fund there must be annual ap- In column 8 is given a figure that shows what it will
propriations by Congress. It is contemplated that those cost If we adopt title mi It must be borne in mind In con­
annual appropriations sh-all be the amount of money col- sidering these figures and this estimate that only about
lected from the employer and the employee; but does any- 50 percent of the people come under the plan of title 11.
one doubt that when the Congress comes to these appro- leaving the other 50 percent of the people to be taken care
priations there would be manipulations so that the fund of as they would be taken care of without title IL There
 1935 CONGRESSIONAL RECORD-SENATE 9423
ametwo estlmates of those figures. To the first thereIs a 6 as against 30. For the 15 years we multiply by65 In-
note attached to column 8 which reads as follows: stead of 250. In order to get the total up to 1980 we multi-
Blasis A: Estimates of the consulting actuaries of the Committee ply by 325 instead of by 1,365.
On Economic Security, assuming (1) old-age-benefit plan similar Mr. President, I cannot conceive of this much money
to that In title II In effect; (2) dependency ratio of iS percent being paid for any purpose unless it be a tax upon the
In 1938. Increasing to 20 percent in 1937.- consumers of the Nation. As was suggested to me a moment
And so forth. The total under that plan is $26,553,200,000. ago, this Is a huge sales tax in most instances. Of course.
So assuming these figures to be correct, we should save that is not true in some instances, because It is not a,
something like twelve and a half billion dollars during the direct sales tax, and in a great many instances it will be
Period of 43 years iuy taking title IL impossible to pass it along to the farmer or to the other
Under basis B, column 9, that figure is cut down to $12,072,.. classes of persons who are not to be benefited by the bill.
000,000. Basis B is the estimate of the staff of the CommitteeI iInvite attention to the fact that the farmer who IS ex­
on Economic Security. empt, the domestic who is exempt from the bill, the other
So we have the consulting actuaries showing a figure Of persons who are exempt; namely, about 50 percent of the
$26,553,200,000, while the staff estimate is $12,072,000,000. people of the Nation, will pay no tax and will derive no benefit
Now, Mr. President, I wish to show in that connection that from the plan, and I ask how anybody expects those people
if we should adopt this plan that would not be the only cost, ultimately to escape a tax which every consumer Is bound
In column 12 will be found the taxes collected for this Puir- to pay under the plan in one form or another?
pose, showing the figures for the various years The total The PRESIDING OFFCER (Mr. Lzwxs in the chair).
taxes are $78,734,800,000. Will the able Senator from Delaware permit the Chair to
I call attention also to column 14, showing that the neces- inquire what was the source of the figures called actuarial?
sary interest to keep this fund intact is $31,749,900,000. Will the Senator state to the Senator from IElinois, who nowr
So while it is true, if it were paid out of the Federal Treas- occupies the chair, through what source those actuarial
ury without title II under the plan of grants and aid, as is figures came? What was the source whence the figures
provided in a part of the pending bill, assuming these figures actually emanated?
to be correct, the total amount necessary to appropriate Mr. HASTINGS. The source was a member of the com­
would be only a little more than $39,000,000,000; but if we mittee, as I recollect. The statement is headed, " Data re­
take the figures of the consulting actuaries of $26,553,000,000, quested of the Secretary of the Treasury by Senator JzssE H.
and add the tax of $78,734,800,000, plus the $31,749,900,000 of METCALFr and submitted by the Railroad Retirement Board
interest, we have a sum it can hardly be conceived the Amer- on June 4, 1935." I think it was Wr. Latimer who submitted
ican people will be able to pay. the figures. There is no question about the accuracy of the
It may be said that It is not fair to use the interest item, figures. I think no one will dispute their correctness.
but I invite attention. to the fact that the tax which will have Mr. KING. Mr. President-
to be paid by the employer and the employee is money that The PRESIDING OFFCER. Does the Senator from Dela­
is being laid out by them, and therefore, if it were not being ware yield to the Senator from Utah?
laid out in this direction, It would earn for them at least 3 Mr. HASTINGS. Certainly.
precent interest; so that if the actual cost to the people of Mr. KING. I may say that Mr. Latimer Is recognised as
the United States, to the employers and to the employees Of probably one of the best actuaries in dealing with labor
the Nation, is actually $78,000,000,000, plus the nearly $32,- statistics and annuities in the United States, and Is the head
000,000,000 of interest, and then we add to that the $26,553,- of one of the most important boards of the Government,
000,000, we have a huge Sulm. Mr. HASTINGS. I thank the Senator from Utah.
Mr. President, I made some calculations of what the costs Mr. President, Mr. M. A. Linton was one of the consulting
would be. I should like to invite the attention of the Senate actuaries and is an outstanding actuary of the country. I
to them. If anyone finds that my figures are incorrect, I desire to quote two or three paragraphs from a speech made
should like to have my attention called to It. I am speaking by Mr. Linton before the Academy of Political Science In
only of title IL. Nothing I said with respect to expense has New York, in which he said:
anything to do with title MII which refers to unemployment The original bill provided, as has already been pointed out, for
insurance, a heavy Federal subsidy running nver one billion a year for 45
Let us take title 11 alone and assume the figures to be years hence. In order to remove this undesirable feature the
correct. Let us take column 8 as representing the actual Secretary of the Treasury proposed the increased rates of tax em­
bodied In the new bll. The purpose was to "facilitate the con­
expense to the Federal Government, column 12 as being tinued operation of the system on an adequate and sound finan­
the actual amount of money collected, and column 14 the cial basis, without imposing heavy burdens upon future genera­
actual amount of interest to maintain the fund. It will be tionls."' The schedule accompanying the Secretarys proposals
found that in the year 1950 the tax upon every State in showed that the deficit had been removed and that by 1980 a
rsre fund of nearly 40 billions (assuming inclusion of the same
the Union for that year alone would be 30 times the number occupation groups as are in the present bill) would have been
of people living in each State in the year 1930. That Is to created.
say, if we take the State of Mississippi, which has some- Let us examine a little n~re closely Into the manner in which
ike2,00,00people In It, and assume that that State the balance was accomplished. suppose we should start out on
thig
thinglike2,00,000the assumption that the pensions we are going to pay to those
pays its share, it would cost the people of Mississippi a lit- who are aged 20 or over when the plan starts, will be paid for in
tle more than $00,000,000 for that one year 1950 alone, full on an actuarial basis by that same group of individual,
the 5btwee
yers nowandThat Is to say, we shall not attempt to pass on to posterity any
What would be the cost of th 5yasbtennwadpart of the cost of these pensions. The adoption of the plan
1950? In order to obtain accurate figures, it is neces- would call for a level contribution from the very sieart probabsy
sary to multiply the number of people living in the State in excess of 81A percent of pay rolls. The rates of contribution
in 1930 by 250. If we take Mississippi as an illustration, it suggested by the Secretary started at 2 percent and Increased to
6 percent in 12 years. In view of the higher figure mentioned
would cost the State of Mississippi, assuming that It pays above, how can the proposed scale of contributions produce a
Its full share of these expenses, $500,000,000. balanced system?
If we take the first 44 years, or until 1980, in order The answer is that after 12 years when the uniform rate will be
i wuldcos
fin ou wht an patiula Stte ortha 6 percent we shall be charging the new workers coming Into the
findoutwha cstitwoudny prtiula Stte or hatsystem say at age 20, a rate that is upward of 40 percent greater
period, we multiply the number of inhabitants now living than the true actuarial premium for the benefits they will receive.
in the State by 1,365. If we take the State ofMsispi When the young men of the future ask why they and their em-
as an Illustration and multiply the inhabitants of MIsS ployers should have to pay so large a rate, the answer will be that
years before their fathers and grandfathers had made promises to
sippi, 2.000,000 in number, by 1.365, we find tatiwol each other which they did not have tha money to carry out in
cost that State a tremendous sum of money, full. Therefore, they conveniently decided to pass on the defl­
on the other hand, if we do not take title MI but take ciency by assessing aLSurcharge agains their children and grand..
same When the workers of the future comes to appreciate
th fsie1gures in order to get the amount of costs ini children.
fully the oriin of this surcharge, are they not likely to inks
1950, we multiply the number of Inhabitants of the State by Istrenuous12 efforts to shit it to the general revenve fund?
9424 CONGRESSIONAL RECORD-SENATE JUTNE 17
Mr. President, here Is a statement that instead of the Mr. HASTINGS. No, Wr. President.. In the committee
amount of 6 percent being all that is required, this actuary- the distinguished Senator from Georgia [Mr. GroRcu] and
and he is a prominent man in his profession-saYS that in many other Senators, largely on the Democratic side, urged
his judgment it would take 81/2 percent; so, notwithstand- that we should not go into the matter of annuity pensions at
ing the discriminations, notwithstanding the penalizing of this time, but that we should wait; that we should separate
the youth for the benefit of the older person, we still shall the subject of annuity pensions from this bill, and take a little
have not enough tax to take care of this fund. more time to study it. and see if we could not work out a
Mr. President. I do not wish to detain the Senate longer plan which would be agreeable to most, if not all, the Mem­
with this matter. I desire, however, to call attention to the bers of the Congress.
unemployment-insurance title. I am not prepared at this time to say that I should vote for
Mr. WAGNER. Mr. President, will the Senator yield be- any of these plans, because I have not made up my mind that
fore he leaves the subject he is discussing? the Congress has authority to force upon anybody an an­
Mr. HASTINGS. I yield. nuity system of any kind. As I say, I am in general sym­
Mr. WAGNER. Unfortunately, I did not hear all of the pathy with the scheme. I think of all things that can be
Senator's address; but I heard his criticism of what he done for a young person, the most important is to have him
termed a discrimination between the younger workers and begin to pay Into some kind of a fund that will take care of
the older workers in the disbursement of the old-age fund. him in his old age, but to have the Congress of the United
The Senator has stated correctly that the older workers States force him to make such payments is so entirely new,
will receive a larger share in proportion to their contribu- and so different from my philosophy of what the Congress has
tions than the younger men. Is it the Senator's view that a right to do, that I am not for the moment prepared to
that difference ought to be made up by an appropriation approve any plan of that character.
by the Government? Wr. WAGNER. Of course, whether or not we ought to do
Mr. HASTINGS. Undoubtedly. Undoubtedly it ought to that in this comprehensive way is an entirely different ques­
be done in some other way than this. tion. I think the Senator will agree, because of our ex­
Mr. WAGNER. As the Senator remembers, the original perience during the past 50 years, that the only way we can
bill provided that ultimately, when the deficit should arise ever give the working people of our country, the wage earners
because of the higher annuity paid to the older workers, and others of low income, assurance against destitution in old
that deficit should be made up by society itself, through the age is by some plan which will be of universal application.
Government, making the contribution. I do not know The Senator knows we have tried the voluntary Idea for half
whether or not the Senator cares to answer the question: a century. Yet at this late day, out of all the working people
but if that change were made in the bill, would the Senator of the country, there are only 2,000,000 of them who are
support the proposed legislation? under voluntary systems. Certainly we must do something
Mr. HASTINGS. I am not prepared to answer that ques- for the rest of them sooner or later.
tion directly; but I will say to the Senator that I have said Mr. HASTINGS. Is it not more than 2,000,000?
that I should be very much interested if we could work out Mr. WAGNER. Two million, outside of the railway em­
a plan of a forced annuity, contributed to by the employer ployees-and even they are subjected to the uncertainty that
and the employee, whereby the fund would go directly, with their voluntary systems will be curtailed without notice.
3 percent interest, to that particular person. I should be They have no real, permanent security. Furthermore,
very much interested in that sort of a plan. statistics show that only 4 percent of the small group of
Mr. WAGNER. It would be difficult to work out such a retired workers who have been under voluntary pension Sys­
plan under a pooling system, but I think the Senator wiLi tems are actually drawing benefits. If we genuinely wish to
recognize the fact that it is not really accurate to say that help provide against destitution in old age, there is no way
the contribution which the younger worker makes to the to do it except by some plan which will be of universal
fund is used to make up the larger annuity paid to the older application.
worker. It really comes from the part of the fund which Mr. HASTINGS. Mr. President, of course, I know how
is contributed by the employer of the younger worker. much interested the Senator from New York has been in
Mr. HASTINGS. Yes. this subject for a long while, and I know how very much
Mr. WAGNER. I will say to the Senator that I am in it appeals to the average citizen to advocate some legisla­
sympathy with his criticism, and as I introduced the bill it tion which will take care of people in their old age.
provided that society itself should make up that difference. Mrt. President, I shall take only a few moments more. I
Mr. HASTINGS. I may say to the Senator, in order to merely desired to call attention to the great interest the
meet the objection which the Senator has just suggested, people have in unemployment assurance. I think people
namely, that the employee cannot criticize because part of generally have reached the conclusion that perhaps we can
this fund will have been contributed by somebody else-that, make some progress by having some kind of unemploymenlt
as I stated before, that fact will be ignored by him, because assurance. It has been insisted that the only way in which
he will say, " In the first place, I never did get enough wages. that can be accomplished Is by congressional action, and
I ought to have had more wages in the first place. Trhis the scheme and plan contained in title III is the result of
contribution by my employer was made for my benefit, and that suggestion.
I am going to have it." I think that is so serious a matter I may call attention to the fact that what we are here
that I should be inclined to give the employee, say, credit for endeavoring to do-and I may emphasize that it is different
only 2 percent of what the employer contributed, and use from what we have a right to do under the Constitution of
the other 1 percent to make up for the discriminations the United States-is to say to the people of a State, " We
which are contained in the bill, if I make myself clear, are going to tax the employers of your State at the rate of
Mr. WAGNER. Yes; I understand the Senator. 3 percent annually. We are going to give them credit for
Mr. HASTINGS. I would have the employer contribute 90 percent of that tax if they can show to the Federal Gov­
I percent for the general fund in order to get rid of that ermient that they have paid In under some State law a
discrimination. I really 'think it is a serious matter, sum of money to meet unemployment assurance, and have
Mr. WAGNER. The reason why I am pressing the ques- spent it under the rules and regulations which have been
tion. of course, is that I wished to ascertain whether the approved by the Federal Government. If they do that they
Senator was simply attempting to find flaws in the proposed may get credit for 90 percent of the amount they have paid
legislation-- for that purpose. Otherwise, we will take the 100 percent
Mr. HASTINGS. No. and add it to the funds in the Federal TreasurY.
Mr. WAGNER. Or whether, If this correction were made Was any such proposal as that ever made before In anY
by restoring the old tax rates, the Senator would support Congress or to a free people anywhere In a democratic form
the legislation. of Government suc~h as our own? What have we to do with
 1935 CONGRESSIONAL RECORD-SENATE 9425
'What a State does In the matter of taking care of employees 1Mr. WAGNER. I did not catch the question.
In the State when they are out of work? It is replied that Mr. BORAH. Where a State made no allowance, then the
when the State cannot do It the Federal Government is allowance made by the National Goverrnment Would not bO
compelled to do it, and that that is the necessary excuse, available?
That is not asufficient excuse. ItIs a sufficient excuse for us Mr. WAGNER. That Is correct.
to want to do something, but it does not give us the legal Mr. BORAH. As a practical proposition, then, this meas­
right to force any such plan as that upon the States of this ure does not really make any provision at all for a very large
Union. number of old-aged people.
The Supreme Court has repeatedly said that Congress Mr. WAGNER. Of course, it has always been regarded as
cannot force upon a State by taxation, or by regulating an obligation of the States to take care of the old people in
commerce or what not, something which the Congress thinks the States. This is the first time it has ever been proposed
a State ought to do for itself. It undoubtedly cannot do it. that the Federal Government aid the States in taking care
But that is exactly what we are asked to do under this of old people, and to that extent it Is a new venture by the
measure. Federal Goverrnment.
There is one reason for it, and it Is a very good reason. Mr. CONNALLY. Mr. President, winl the Senator from
Unless we can force this upon all the States by punishin Idaho yield?
them upon their failure to adopt the plan by imposing a Wr. BORAH. I yield.
tax upon employers within their borders it will be found Mr. CONNALLY. I may say to the Sebator from Idaho
that the various industries in one State which provides for that the theoryv is that the other States will come into the
the tax cannot compete with those in some other State plan when there is a Federal law. Of course, if a State has
which does not impose the tax, which, by the way, Is a no old-age-pension system, the Federal Government cannot
further demonstration that all this tax is passed on to the contribute toward maintaining the old people in that State.
consumer. That is a reasonable excuse for this legislation. Mr. BORAH. I understand that perfectly; nevertheless,
But it seems to me that the sooner we realize the limitations the fact is that no provision is being made for a very large
upon our own power, the sooner we realize that there are number of old-aged people as the laws stand in the States
still existing 48 Independent States in the Union which have now.
a Fight to control their internal affairs, the sooner we will Mr. WAGNER. Perhaps adequate provision Is not. w I e,
get away from this kind of legislation and this kind of Thirty-five States are attempting to meet tbe:r obligatio'4 by
trouble for the Congress. taking care of old-aged dependents, some at the age of VI'~and
Mr. BORAH. Mr. President, will the Senator yield? others at the age of 70, but in recent years, because of the de­
Mr. HATNS I ied pression, the amounts which the States have contributed have
Mr. BORAH. I desire to ask the Senator with regard to been somewhat reduced. The obligation to take care of the
the ld-ge
or ensons
hos wh arenow65 ear ofold people has always been regarded as an obligation of the
teodage.A I pnensionsdo thoe whon,are nowv 65years wofl States themselves, and the Federal Goverrnment, recognizing
mage. as Iaunerwandeo therplasn, the mavernent woulds that they* have had difficulties In raising the money, due to
makeb ane Sallwne. o$1pepesntbemchdaistthe depression, is for the first time in our history proposing
to match the State contributions toward taking care of old
Mr. HASTINGS. Is the Senator speaking of title UT or people. So it is a step forward, and we are hopeful, of course,
of title I? There are two titles which relate to old-age as the Senator from Texas has said, that the States which
pensions. One is the provision whereby the Federal 0ov- have not inaugurated systems for taking care of the old will
ermient would contribute $15 if the States contributed $15. enact legislation so as to get the benefit of the Federal contri­
Mr. BORAH. That is the one to which I have reference, bution.
that is, in regard to people who are now 65 years of age. If I may, speaking to the Senator in terms of actual
Mr. HASTINGS. Yes. amounts spent, there Is now being spent by the States for thiis
Mr. BORAH. And who have no opportunity to share in purpose a little less than $40,000,000.
the contribution which will be made in the future. Mr. CONNALLY. Mr. President, will the Senator from
Mr. HA-STINGS. That is correct. Idaho yield to me?
Mr. BORAH. As I understand it, the Government would Mr. BO0RAH. I yield.
contribute $15, provided the State contributed $15. 7I the Mr. CONNALLY. As aii Instance, my State has no old-
State did not contribute $15, or some amount, then there age-pension system, but I think this year the people are voting
would be no contribution at all. on a constitutional amendment providing for such a system.
Mr. HASTINGS. That is correct, and I anticipate that other States will follow through if this
Wr. BORAH. In other words, there wrill be no contribu- measure shall become a law. The Senator from Idaho is cor­
tion except as it depends upon the contribution made by the rect in assuming that for the immediate present there will be_
State. a large number of old-aged persons who will not receive any
Mr. HASTINGS. That is correct. grant out of the Treasury.
Mr. BORAH. And at the utmost, if the State contributes Mr. BORAH. Undoubtedly there are a number of States
in full, the contribution will be only $30 per person. which are not prepared financially to take care of old-age
Mr. HASTINGS. That Is correct pensions at this time. There are States which the National
Mr. BORAH. Is the Senator advised as to how many Government is assisting in carrying their burdens, with ref­
States are now contributing as much as $15 for old-age pen- erence to relief, and so forth.
sions, how many States have laws providing for that Mr. WAGNER. Yes; they are.
amount? Mr. BORAH. It seems to me we ought to take Into consid­
Mr. HASTINGS. I think it is something like 23. The eration the fact that, so far as the people who are now 65
figure is stated somewhere in the R~coan. years of age are concerned, this measure is not and should
Mr. WAGNER. Mr. President, if I may volunteer the not be regarded wholly as a pension proposition. These old
Information, 35 States have enacted old-age-pension laws people, at the ezr'd of 4 or 5 years of depression with all
under which they contribute toward the support of dependent means exhausted, are in a condition where they must be
old persons, and different ages are provided-in some States taken care of, and to make a Federal contribution of $15 a,
710 years and in others 65. I think there are but two or three month dependent on whether the States are able to con­
States which contribute more than $15 a month, and the tribute $15 in addition does not seem to me to be meeting
majority of the States now, I think, are contributing less the situation.
than &,15a month. There Is a question of relief here, as well as the questloo
Mr. BORAH. In other words, in that condition of affairs, of pensions, because it is now the effort of the Government
there would be no allowrzce for old-aged persons in those to take these people from the relief rolls, and I am advised
States at all? that hundreds of thousands of them will go back into the
9426 CONGRESSIONAL RECORD-SENATE JUNE 17
miserable poorhouses. county farms, where the living Is of Mr. BORAH. I am addressing myself to the Senator for
the mast meager kind. Does not the Senator from New that reason.
York, who has given so much time to this matter, and un- Mr. WAGNER. In the first place, the Senator from Loulsi­
derstands it so well, think that we ought in this provision of ana says that these people are upon charity. But the States
the bill to take into consideration something other than the which have passed pension laws and called them pension
general principles which obtain with reference to security laws do not want to regard these old people as being subjects
legislation? of charity. Perhaps In a technical sense they are. But they
I know perfectly 'well that there will be hundreds Of thou- are citizens of the State who in their days of age have met
sands of old people who will really die of nonnutrition if with adversity, and the State has assumed the obligation of
more is not dane for them than would be done under the taking care of them because of their claim upon the State
pending measure. to which they have made their great contributions by creat-
Would it not be practicable to make a better allowance, and ing wealth in their prime.
not make the additional allowance dependent wholly upon We do not call this charity in New York, nor do they do so
State action? Let the State make an allowance equal to, say, in any of the other States. We have to rely upon the States
$15 if it can, because mast of the States are unable to go to ascertain who these people are who require aid, and the
beyond that, and l'-t the National Government make an addi- 33 States which have enacted pension laws have the machin­
tional allowance, which it will take out for a limited number ery with which they ascertain this fact. As fast as the States
of years without any other allowance by the State. ascertain that there are more who need this help the Federal
Mr. GEORGE. I was going to make the suggestion that Government will certainly increase its assistance in propor­
at least the Federal Government might take care of that fulltin
pension for a limited period of years, until the States were in I know of no method by which the Federal Government
position and had by appropriate legislation been able to set can go around the country to ascertain where these people
up the old-age-pension laws, even if far no more than for are. We must rely upon the State machinery.
2 or 3 years. We are now saying to the States, "1You have the machinery.
Mr. BORAH. I think something of that kind ought to be By passing your laws you have said in a definite manner that
done.yoreadiasaobiainttaecrofteeppl
Mr. WAGNER. May I make this suggestion to the Sena- yitoutregardwitg ashan obigation toetakehcare; ofd theseopeople
tar: Thirty-three States have already set up machinery to witout throwingth hemobination the poorhouseyo andinoflar asr
take care of their dependent old people. So there are onl your assume that yobligatinde. l gv o dla o
15 States that have done nothing. evr dollarthat ysounspend. Icntv trugoth
Mr. BORAH. Fifteen States. Iouthinko hatkesbgoing toabe an inentive throbenughoutthed
Mr. WAGNER. But the Federal Government is taking cutyt aebte aeo hm thsbe ugse
care of those not under State law, for the period of time that some of the States, who now contribute over $15 per
which the Senator from Georgia [Mr. GEORGE] Suggests, by month to the dependent old. will reduce their contributions
direct relief, and in addition the Federal Government is to the $15 level that is to be matched by Federal contribu­
now supplementing local efforts by helping a great many of tions. I cannot believe that any State will be so ungenerous
the old people in all the States. The provisions of this astaadItikta htvrteFdrlGvrmn
bill are designed to add to these efforts and also to act as gives will be added to that which the States are already doing
an incentive to the States to be a little more generous in for their aged people.
the care of their old by matching their efforts dollar for Mr. BORAH. Mr. President, of course the State-has the
dollar. This proposal is much mare than the Federal Goy- machinery, and of course the State can ascertain the numn­
ermient ever contemplated before the serious depression. ber of persons who are entitled to relief, but the State does
Mr. LONG. Mr. President- not have the money.
The PRESIDING OFFICER (Mr. BoNx in the chair). Mr. WAGNER. The States have been making contribu-
Does the Senator from Idaho yield to the Senator from tiOns.
Louisiana? Wr. BORAE. We know perfectly well that we are aiding
Mr. BORAH. I yield. States to take care of their educational systems, and their
Mr. LONG. I also wish to attract the attention of the teachers, and everything else; and we know that under those
Senator from New York [Mr. WAGNER]. As I understand, circumstances they do not have the means to take care of
this bill purports to give a pension to those who are on these old people. These old people are people who have made
charity. I have received statistics from the Census Bureau those States, In a large measure. Out through the North-
by which I will show that those who are. actually dependent west they are the pioneers, they are the men and women who
upon charity will by the provisions of this bill receive out of built those Commonwealths, and because the State is not able
the Federal Treasury about 60 cents a month. I have statis- to take care of them they must now go to a county farm. If
tics to show that this is not a pension at all. This is not we are going into this thing at all, if the National Govern-
much more than a paupers' bill. muent is going to take hold of it, let the National Govern-
Mr. BORAH. May I say to the Senator from New York ment make a provision which will take care of these old
that it has been brought to my attention that a number of people during this depression, and not be bound by the
these elderly people, 65 years of age, at the end of 4 or 5 theory of a permanent scheme of national security.
years of depression have now been turned back to the coun- Mr. WAGNER. Mr. President, I may say to the Senator
ties and to the States; they have been taken off relief; the that, so far as the emergency period is cr'ncerned. the Fed-
State has been asked to take care of them, and the county eral Government has been helping all of the States to take
has been asked to take care of them, and the county and the care of their old people. It will continue to do so. But this
State are undertaking to take care of them by means of the bill provides a permanent plan in addition to what we have
poor farm, and so forth. That leads me to believe that the been doing during the emergency. period.
Natior -il Government ought to do more than to make a I hope that the time will come shortly when we shall give
contribution of $15 a month and make that dependent upon these old people even more. However, there Is nothing In
the proposition of the State also putting up $15, because this bill to prevent the States from taking care of their de-
there is an element of relief in this matter, aside from the pendent old persons as well as they can. I have not heard
question of preparing a general scheme of security. the complaint from many States that they are not able to
Mr. WAGNER. I agree absolutely 'with the Senator from carr7 the load.
Idaho, and the Senator knows that I would be willing to go Mr. BORAE. Neither the States nor the National Gov­
as far as anyone in this body. Perhaps whatever criticism ermient is generous 'when it stops at $30, when both pay to
has been directed at me has been due to the fact that I have make up that amount, so far as that is concerned,
been anxious to do too much in that regard. I Mr. RUSSELL ross.
 1935 CONGRESSIONAL RECORD-SENATE 9427
Mr. BORAM DMd the Senator from Georgia wish to ask the only question here for discussion is whether we are tak­
a question? ing care of the situation In dollars and cents. There Is no
Mr. RUSSELL, In line with the suggestion of the Sena- question of constitutional authority so far as this particular
tor from Idaho that many of the States are unable at this point is concerned, because that Is covered by the facet that
time to contribute to the old-age-pension fund, I will say we have already provided for $15; and the question that I am
that the State which I have the honor in part to repre- now raising is, assuming that we are going to help, assuming
sent, under its constitution cannot levy taxes for this pur- that the National Government is going to take part in this
pose. The purposes for which taxes may be levied in the matter, and assuming that the National Government Is
State of Georgia are enumerated in the constitution, and going to assist the States, the question is, Are we going to
the payment of the old-age pension is not included therein, assist them sufficiently to enable the old people to 'live?
It will be necessary to amend the constitution, and that That is the only question here. I do. not think it takes care
cannot be done until the next general election, so the people of them. I ask the able Senator from New York 'and the
may pass upon it. But as the Federal Government is now able Senator from Mississippi, who is in charge of this bill,
turning back to the States and the counties aUl of the un- and other Senators, who, as I know, are in full sympathy,
employables in the State, the old people who are unable to with this proposition, Are we going- to be satisfied to allow
work, and the ones most deserving, as indicated by the only $15 a month, with the uncertainty as to whether the
Senator from Idaho, the State is absolutely powerless to levy States will put up anything, and. therefore, have nothing
a tax to raise funds for paying these people any pension come of it, or are we going to make a provision which will
whatever, guarantee these old people at least a sufficient amount to
Therefore, the people in my State will be taxed In part for keep them from actually dying of starvation or neglect?
over something like 2 years to provide these funds for old- Mr. WAGNER. I may -say to the Senator that he is not
age pensions, and until the State constitution is amended accurate in saying that the States will not make any, con­
cannot secure a single cent from the Federal 'freasury to tributions, and that therefore the old people will receive
supplement the State funds, for the State funds cannot be nothing. As I tried to emphasize previously, there are 33
provided. States that are already contributing.
I have prepared an amendment which I propose to offer at Mr. BORAH. I am referring to the States that do not. In
the proper time, which will require for a period of 2 years those 15 States we will have no help for them whatever.
from the time this act goes into effect that the Federal Mr. WAGNER. I will repeat what I have heretofore said.
Government will make this contribution of $15 without that I made inquiry as to all that, and I ascertained that in
regard to any action on the part of the States, all the States during this emergency period the Federal
Mr. BORAH. Let us not confine it to $15. That is just Government has been granting relief to take care of old peo­
slow death, ple. How much they are receiving I am not able to say, but
Mr. RUSSELL, I shall be glad in joining the Senator the Federal Government has not abandoned them entirely,
from Idaho in making it a larger sum, but I should "ke to even In those cases where the State has been unable to do
have something done so that the people will not starve when anything at all,
the State is powerless to help them. I should like to have Mr. BORAH. I am advised that the Federal Government
contributed to my State as much as the amount of relief has notifled the local authorities that they must take care of
contributed by the Federal Government to the other States, a certain class of people, including the old people, and that,
Mr. WAGNER. I wonder if the Senator is not referring to under the program which has been worked out during the
the Governor of his State, who has been criticizing whatever last few months, these people are now dependent upon the
appropriations we have made here to help the unfortunate in States, and they are going back to the county farm or to the
his State. poorhouse and to simila places In order that they may be
Mr. RUSSELL. The views of the Governor of the State taken care of.
on old-age pensions does not reflect the views of the people If these were normal times, and if the States were In a
of the State. normal condition, if they were in a position to raise the
Mr. WAGNER. I am glad to hear the Senator say that, money, I would feel entirely different about it; I would feel
Mr. RUSSEILL As a matter of fact, at its last session the that they ought to do It; but when we ourselves are con­
general assembly voted for a constitutional amendment pro- tributing for such things as educational purposes, slum clear­
viding for old-age pensions. The bill passed the house of ance. and so forth, that I know the States are not In a
representatives by a vote of 165 to 1. The bill also Passed position to do their local work, We have already crossed
through the seniate with the required two-thirds majority, that bridge; we have already passed over the proposition
The Governor undertook to veto the proposed constitutional that we are going to help them. Now the question is, Are
amendment. That will have to be fought out in the State we going to help them suffciently?
courts to see if the matter is to be submitted to the people Mr. LONG. Mrt. President-
at the next election. Regardless of the outcome of the mat- The PRESIDING OFFICER. Does the Senator fromt
ter, the people of the State could not avail themselves of the Idaho yield to the Senator from Louisiana?
benefit of this measure before 1937, following the election of Mr. BORAH.L I yield the floor.
1936, when the legislature meets again. Mr. LONG. Mr. President, I desire to offer the amend.
Mr. BORAH. I am not Interested In local politics in this menit which I sent to the desk earlier today, and 3[ ask the
situation. clerk to read it.
Mr. RUSSELL. Neither am I interested in local politics. The PRESIDING OFFCERt. The amendment will be
arnd I did not inject that question, but I am tremendously stated.
interested in seeing that the aged and afflcted and those The CHIEF CLEmn It is proposed by Mr. Loio to amend
powerless to assist themselves in may State are given the same the bill as follows:
benefits and advantages as are accorded the people of other First. On page 2, lines 3 and 4, after the word " assist­
States under the terms of this bill. They should not be ance ", strike out the comma and the following words: " as
penalized. Because of the constitutional inhibition, t'he far as practicable under the conditions in such State,"
State is powerless, and had it not been for constitutional pro-. Second. On page 2, line 4, strike out the word ' needy."
visions the general assembly might have passed the bill over Third. On page 2, line 7, strike out the figures " $49,750.­
the veto of the Governor, but It was necessary to amend the 000 "', and insert in lieu thereof the figures " $3,6oooogg,000,.r
constitution. The legislature did all that was ln their power Fouth. Beginning with line 15 on page 2, strike out afl
to do. the balance of page 2, and all of pages 3,4, 5. and 6, down to
Mr. BORAH. The question of centralization of power and including line 14 on page 7. and inst In lieu thereof
does not arise, because there Is just as much centralization the following:
of power in contributing $15 as there is in contributing $30. 8=.2. P..o- th su appropriated tberefor tbe 5ecdrey of
We have undertaken to do that; that is now in the hill. So the 1'macfr shaU pay to each State for each quarter. beginning
 9428 CONGRESSIONAL RECORD--SENATE JUNE 17
with the quarter commencing July 1. 1935. such proportion of the Eighteenth. Beginning on page 52, lMe 8, strike out afl
"Mount appropriated as the number of persons over the age of of title IX.
60 In such State shall be to the total number of persona over the
age of 60 In the United States, to be calculated according to the FORcM OR LAW BRNQi ABOUT aEDIsTRzNUTrIos OF WJCALTH
latest offclal reports of the United States census. That the same The PRESIDING OFFICER. The Chair is not certain
shall be remitted to each State solely on condition that It make
due and legal provision to pay the same in equal sums to all whether the Senator from Louisiana is in order in speaking
persons In the said State who are over 60 years of age and on his amendment or amendments for the reason that under
'whose net Income during the preceding 12 months was less than the agreement to consider committee amendments first, title
$500. or whose ownership and possession of property is of a value XI. which is the committee amendment, has not yet been
less than *3,000; and nothing hereby provided shall prevent any
State or subdivision thereof from providing additional pension disposed of. The Chair wonders what the Senator from Mis­
to any person from the revenues of such State or subdivision sissippi desires to do In that connection?
thereof. Mr. HARRISON. I have no objection to considering the
Seventh. On page 16. beginning with line 16, strike out amendments as a whole so we may get them out of the way.
down to and including line 21 and insert In lieu thereof the I ask unammnous consent that they may be considered en
following: bloc.
SxC. 301. For the purpose of enabling each State to furnish The PRESIDING OFFICER. Does the Senator from Lou­
financial assistance to persons who are unemployed and who re. isiana desire to have his amendments considered en bloc?
ceive no berefits under title I of this bill, there Is hereby au- Mr. LONG. I would.
thorized to be appropriated, for the fiscal year ending June 30, TePEIIGOFCR steeojcin h
1936, the sum of $1.0000,00.000. and for each fiscal yea'r thereafter TePEIIGOFCR steeojcin h
the sum of $1,000.000.ODO to be used as hereinafter provided. Chair hears none, and it is so ordered.
Eighth. On page 17. beginning with line 9, strike out the Mr. BORAH. Does considering them as a whole, or en
following: bloc, mean that the amendments are not subject to amend­
The Board shall not certify for payment under this section In ment?
any fiscal year a total amount In excess of the amount appropri- Mr. LON)G. They are subject to amendment, of course;
ated therefor for such fiscal year. but it means they will all be considered as one amendment,
Ninth. On page 19, line 24, after the word " State ", change As a matter of fact, It is the same principle throughout.
the period to a semicolon and add the following: Mr. President. I shall show that what is proposed by the
Provided, That the said State agency shall have right to contest present bill is an impossibility, impossilbe In any respect
any and all findings of such Board in a suit filed In a United either on the law or on the facts. I shall show that what I
States district court in the said State. am proposing is feasible, Practicable, constitutional, and
Tenth. On page 20, line 11, strike out the figures "1$24,- workable.
750,000 " and insert in lieu thereof " $1,006,000,000."I In the first place, the Senator from Idaho [Mr. Bogas]
Eleventh. On page 20. line 13. strike out the words, "a sujm made a statement to which I wish to refer for Just a mo­
sufficient " and Insert in lieu thereof the words "1an equal ment. If we are going to provide an old-age Pension, then
slim..let us provide a sum sufficient to pay old-age pensions. I
Twelfth. On page 21, line 6, after the word "agency" do not agree that the pension should start at age 65, nor
strike out the semicolon and insert the following: "1with was that the position of the President of the United States.
right to appeal to the courts of the State;". He thought it ought to begin at 60, and everyone else I ever
Thirteenth. On page 21. line 22, beginning with the figure heard of has always stated 60 years would be the age at
"(1) ", strike out the figure "(1)", and all of line 23 and which to start payment of a pension. I never heard of it
24, and lines 1, 2, and 3 on page 22. being placed at 65 years of age until the bill came before us.
Fourteenth. On page 22, line 10. strike out the word " one- Mr. WAGNER. Mr. President-
third " and insert in lieu thereof the word " three-fourths.", The PRESIDING OFFICER. Does the Senator from
Fifteenth. On page 23. line 5. strike out the word " two- Louisiana yield to the Senator from New York?
thirds ' and insert in lieu thereof the word " one-fourth." Mr. LONG. I yield.
Sixteenth. On page 24, line 25, after the word "State"~, Mr. WAGNER. Most of the State laws which I have ex­
change the period to a semicolon and insert the following: amined Provide for a pension beginning at the age of 70.
" the said State agency shall have the right to contest in a Mr. LONG. I have tried to explain to my friend from
district court of the United States the action of the said New York that while they may be called " pension"I laws, yet
Secretary of Labor to be filed in such court in the State they are " paupers'1 laws.
Wherein said State board may be domiciled." Mr. WAGNER. The States do not agree with the Sen­
Seventeenth. Beginning on. page 44, strike out all of title ator.
VIII, and insert in lieu thereof the following: Mr. LONG. But the dictionary does. I hate to refer to
Tr=L VIII. REvENuEs Iroa PumosEs nmNp~r~ any man as a pauper, but the facts are, If I may be per­
SECTION 1. In addition to other taxes levied and collected there mitted to have the attention of Senators, that if we have a
shall be annually levied, collected, and paid upon the wealth or lw which requires a man to prove himself to be destitute
property owned by every individual, a tax thereon in accordance and needy before he can get any allowance, we compel him
with the following provisions. viz: t di r ned ocamta ei apr ti o
(a) One percent on the value in excess of *1.000.000 and up to t di r ned ocamta eI apr tI o
and including *2.000,000. a pension law. We pension the judges of the courts for the
(b) Two percent on the value in excess of $2,000,000 and up to services which they previously rendered, whether they have
and including *3.000,000. any money or not. We pension soldiers of the Spanish-
(c) Four percent on the value in excess of *3.000.000 and up Aeia n ii aswehrte aeaymnyo
to and Including $4,000,000.AmrcnadCvlWrwhteteyaeaymoyor
(d) Eight percent on the value in excess of $4,000,000 ar'd up not. That is a pension. But when we provide by law that a
to and including $5,oooooo. man must prove himself to be destitute or to be needy before
(e) Sixteen percent on the value in excess of $5,000,000 and up he can get any money, and only that man is permitted to get
to and Including *6.000,000.
(f) Thirty-two percent on the value in excess of $8,000,000 and any money under the law, then it becomes only a pauper law.
Up to and including $7,000,000. Mr. WAGNER. Mr. President, will the Senator yield fur­
(g) Sixty-four percent on the value in excess of *7,000,000 and ther?
up to and Including *8.000,000.
(h) Ninety-nine percent on the value in excess of $80000 Mr. LONG. I yield.
SEC. 2. The said taxes shall be levied and collected annually, Mr. WAGNER. I am anxious to understand clearly the
shall further allow to the taxpayer the opportunity to make pay- Senator's amendment. The Senator would take those over
nient of the same in cash or in kind, and the Treasury shall make 60 years of age-
disposition and handle the same In a.-cordance and subject to the
provisions contained In said title iXX Mr. LONG. No. If the Senator will listen he will get it
SEC. 3. Such sums as are collected hereby as are In excess of the all straight in a minute. The Senator from New York will
requirements under the provisions of this act shall be used for ntlse om sln sIhv itndt i fh itn
the other lawful purposes of government, to Include future Wlegh evrthn
otlseto e asay Ionam sateisfiedeoo tohat he
iw intgens
tion of Congress to provide the families of the united state iht vrtigIsy mstsid o.ta ewl o e
reasonable homesteads and the comforts thereof. as muick good as I1do,
1935 CONGRESSIONAL RECORD--SENATE 9429
Mr. President, there -are 10,335.120 persons over the age accumulated for payment in the future. The United States
of 60 in the United States. I need only refer to Government Government cannot support any kind of worth-while pen­
Compilations and the statement of the Senator from New sion project unless there is revenue to be raised from
York. Of this number there are 96 percent whose earning some source not yet tapped, and a material source at 'hat.
capacity is below that which enables them to live on a nor- I have advocated raising income taxes, but that winl not
mal-subsistence basis. In other words. 96 percent of our bring In so much more; in fact, really not near enough wheni
entire population earn less than a subsistence wage of this compared to what will be needed.
kind. That is one thing on which we agree. I shall give We have only one process by which we can raise a sufM­
the Senator better figures than that. I shall give cient amount of money to support a pension plan, a pension
some figures which have been published by life-insurance plan that is worth anything to the country, and that Is by a
companies. The only thing I have now are some figuresj capital-levy tax.
which I clipped out of an Insurance publication. This reads: So, therefore, I have proposed a substitute In these words:
What happens to the average man of 25 upon reaching the age Instead of paying 60 cents a month, as the payment would
of 65? Only one wml be wealthy. be, to everybody 60 years of age and over who needs a pen­
We had considerable trouble locating- this advertisement. sion, I propose to pay around $30 to $35 a month to those
I thought I could get it by telephoning the Insurance com- who should have a pension. Instead of requiring a State to
panies, but I learned that they claimed they did not have it put up $15 a month, I propose that the Federal Government
or they had forgotten all about it. I am sure they were in shall pay from $30 to $35 a month. If a State government,
loate itbecuseit ad eenrecpie ina
goodfaih. is not able to put up anything, that will not deprive a man
goo
lcatd i beaus ithadbee reopidi
fath.I orwoman of getting his pension; and if a State government
well-known newspaper in this country. Then I telephoned is able to put up an adequate amount, the State, if it can
the insurance companies and they said they would be able to do so, may augment the Federal contribution and give more
send the entire statistics in a short time. I read this again: than '$30 to $35 a month pension to people more than 60
Only one will be wealthy. Four will be well to do and able to _years of age.
enjoy comfort and recreation. F'ive will be working for a living A
with no prospect of relief from drudgery. Thirty-five will have Aan example, I state as a conservative statement that
died, In many cases leaving a family In need of some assistance,more than one-half the States in the Union have proved
that they cannot pay any substantial sum whatever as a.
Fifty-five will be dependent upon friends or relatives for Charity,
Of all those about 65 or 70 years of age who are left alive, pension. Why? Because they are having to rely upon the
55 will be dependent upon charity. This was a statistical gratuity of the Federal Government to keep their schools
compilation made during pretty good times. The condition open. They are having to rely upon the Federal Treasury
Is much worse now, because our own data show it Is for unemployment relief. They are having to rely upon the
somewhere around 96 percent of our people who are earning Federal Treasury for the most ordinary kind of revenue to
below a subsisting living, support the State government. Talk about making the State
If we are going to pay a pension that is going to amount treasury"match the contribution of the Federal Treasury in
to anything, certainly we ought not to begin a pension too order to get relief! We might as well say that they have to
far away from the average unemployable age. Fifty years discontinue caring for the blind, the deaf, the dumb, the in­
of age is almost an unemployable age, except for men of sane, the crippled, and those who are in the public hospitals.
talent and skill, and I do not mean manual skill. Sixty School facilities and things of that kind would have to be
years of age at the very worst is the furthest age at which curbed if that were done, because there is practically, no
we should consider awarding a pension. I am going to State in America which is operating within its budget at the
argue this on the basis of 60 years of age, and then I am presnt time.
going to argue it on the basis of 65 years of age, and I shall Therefore, if we say to a State, "We are willing to give
show how impossible the whole scheme is on the basis of you Federal help for an old-age pension provided you match
either 60 or 65 years of age. that help "', we are the same as saying to the State, "1You
Let us, for the purpose of argument, not count the 385,000, have either a physical impossibility in one direction or an im­
because most of them are dead by now, having gone through practicability in another direction, because you have to cur-
193he or193
someof ear ora pat o 195. hustail some of the expenditures you are now making in order
there would be 10,000.000 people drawing $49,000,000 a year ta o a ac h eea ud.
out of the Federal Treasury. Deducting one-third-which I doubt if any of the Western States, probably outside of
Is more than the census shows and which is more than the California, could make this payment. I doubt if any of the
life-insurance companies show-deducting from the 10.000 ­ Southern States could make this payment if there Is a rea­
000 people one-third, who are either wealthy or able to tale sonable pension paid. My State. the State of Louisiana, is
care of themselves, would mean that $49,000,000 a year, or in a little bit better shape than the average Southern, State.
$4,000,000 a month, would pay those left about 56 cents as I said the other day, because of natural resources which
per ont apice.we have. We have there, as is well known, probably the
world's greatest supply of sulphur and salt. We likewise have
If the entire $49,000,000 which is covered in the bill is oil and gas deposits, and various and sundry ores that are
going to those found to be needy by the statistics of the found in our State, which make it possible for Louisiana to
Government and by the statistics 'of private people and by bear burdens which other States cannot bear. But if the
the statistics of the life-insurance companies, we would pay State of Louisiana today were called upon. according to the
them about 56 cents per month out of the United States life-insuranice companies' statistics, to put up $15 a month
Treasury if we gave a so-called "pension"' to everybody for every man over 60 years of age who, by the records we
who is 60 years of age or over. Of course. it might be $1 now have, is shown to be dependent on charity for support,
if we raised it to 65 years of age; it might be $2 if we raised the State of Louisiana would have to give more money than
It to 70 years of age; it might be $3 If we raised it to 75 its entire taxing resources amount to at the present time.
years of age, or $4 if we raised it to 85 years of age. I am We should have to double the present taxes in the State of
talking about an age when a pension should start. I shall Louisiana if we were to pay $15 a month to every man who 13
prove in a moment that raising it to 65 years of age would over 60 years of age, who is to some extent dependent upon
still leave an Impossible situation under the bill. charity for a living, either of outsiders or of his own Imme­
There is only one way we are going to be able to pay a diate relatives. If we were to undertake to take care of the
pension. We cannot pay it from ordinary sources of taxa- whole of that class of people at $15 a month, the State of
tion. The United States Government cannot support a pen- Louisiana would have to double its taxing resources in order
sion law from the ordinary cources of taxation which now to pay the amount that would be required, and it Is not pos­
prevail. it is impossible to do it. The United States Gov- sible for that State to do it; and if it Is not possible for that
eminent cannot today pay its own costs of operation from State to do it, then I know It is not possible for any other
present resources, to say nothing of the bonds which It has Southern Sta~te to do IL
LXXEIC-495
 9430 CONGRESSIONAL RECORD-SENATE JUNE 17
Mr. President, I desire to make this further correction In Federal Government. Bear In mind that In order for the
the bill: I wish to speak of the unemployment feature, and State government to contribute its part to this Federal relief
ask the Senate to consider what I am saying as a whole, Program, the State government has to levy a tax for every
in the unemployment feature there is donated a sum of one of these things. The State has to find some new sort of
about $24,000,000, perhaps $40,000,000-I do not state what a State tax, because there is no State today which has the
the figures are; I could run through the bill and get them- revenues that would be required to carry out the purposes of
but, at any rate, there is some small sum appropriated by this bill any more than those purposes are now being carried
the Federal Government for unemployment relief. Why, out by the States. The State will have to raise additional
Mr. President, if this is going to be an unemployment bill revenue. Therefore there are two forms of taxes. Pinst, the
at an, what good is it going to do to appropriate $49,000,- State must provide a tax for all that is in addition to what
000 to take care of unemployment when we are already it is now raising in the few States that now make provision
appropriating $5,000,000,000 to take care of unemployment for paupers. I mean by that, today I understand the States
for the year 1935 and 1936? If we are having to appropri- are raising $49,000,000.
ate a billion, two billion, three billion, four billion, up to If they provide any more money than $49,000,000-which,
five billion, and perhaps $6,000,000,000 for the purpose as I have previously proved, is an infinitesimal sum-if they
of taking care of unemployment in the year 1935 and pait provide any money at all for unemployment, if they provide
of the year 1936, what assurance have we that forty-nine for dependent aid for children, or any of these things for
or fifty million dollars or $24,000,000 is going to be sufficient which provision is made, the States will have to levy a tax
for that purpose in 1936? with which to do It. The State of Louisiana must levy a
I propose that the States shall not have to match that tax; the State of Arkansas must levy a tax: the State of
money. We propose in the bill which has been submitted Mississippi must levy a tax; the State of South Carolina
by the Finance Committee, known as the " administration must levy a tax; the State of North Carolina must levy a
bill ", that a State shall get Federal unemployment money tax; the State of Iowa must levy a tax. Every one of the
provided the State matches it dollar for dollar. The State 48 States of the American Union will have to levy a tax
cannot match it dollar for dollar now. The State never inside its borders in order to make the necessary contribu­
will be able to match it dollar for dollar. The State has not tion to the Federal relief program in order to get any money
the taxing resources upon which it can depend to raise any at all out of the Federal plan.
such amount of money as that. Therefore, unemployment If the States are not only unable to levy any taxes for
relief must of necessity be enjoyed, so far as concerns the that purpose but if they are not even able to levy enough
assistance of the Government, by a relatively small number taxes to support their schools, if they are not able to levy
of the people who are entitled to It. enough taxes to support their hospitals, if, they are not now
The next amendment which I propose is one which would able to levy enough taxes to take care of their own domestic
take out of the hands of Federal bureaus the power arbi- affairs as they are now being handled, and it every one of
trarily and for their own, purposes to cut off a State from the States, or nearly every one of them, is living at a rate
old-age pension relief, ori from unemployment relief, or that does not even provide for a balanced budget-if all of
from dependent-children aid and relief. By the bill which the States are piling up deficit after deficit at the present
is now presented here, whenever the Federal bureau set- time in caring for things now committed to them, how can
up here in Washington find in their minds sufficient reason we expect the States of the American Union to levy any
as to why a State should not be allowed to have any more more taxes, and upon whom are they to levy these taxes?
pension aid, or any more unemployment aid, or any other Mr. TYDINGS. Mr. President-­
aid of that kind or character, all they have to do is to The PRESIDING OFFICER (Mr. SCHWELLENRACH in the
notify the State that they consider that it has breached chair). Does the Senator from Louisiana yield to the Sen­
one of the rules of the bureau or one of the laws of Con- ator from Maryland?
gress, and thereupon, ipso facto, they cut them off the list Mr. LONG. I yield.
and decline to send them any money at all, Mr. TYDINGS. I should like to ask this of the Senator
As the bill Is now presented to the Senate, that leaves from Louisiana; what will be the annual cost of administer­
it within the sole jurisdiction of that particular bureau to ing this fund under the Senator's plan?
do whatever it wishes to do. I add to this provision a Mr. LONG. The whole plan?
further clause that whenever any board handling unem- Mr. TYDINGS. Yes; how many billions a year would
ployment-relief funds, handling dependent-aid-for-children It cost?
funds, or handling old-age-pension funds decided that a Mr. LONG. Somewhere near six billion.
State ought to be cut off from any further relief the State Mr. TYDINGS. Six billion a year?
shall have a right to take the case into court, and if the Mr. LONG. Yes.
board is acting arbitrarily or unreasonably or without right, Mr. TYDIN4GS. That would be In addition, of course,
the State shall have a right to contest and annual the sus- to the regular expenses of the Government as we now have
per-ion order which prevents the State from having the them?
relief. Mr. LONG. No; I would judge this would eliminate about
Gentlemen of the Senate, that is not an unreasonable all of the present relief expenditures.
thing. That Is a very much needed thing. Regardless of Mr. TYDINGS. I do not include the emergency funds.
whether the Democratic Party or the Republican Party is in So that we would need, in round numbers, from nine to ten
power, the time will come, as it always has come, when arbi- billion dollars a year upon which to operate the Federal
trary actions and arbitrary orders of boards and bureaus and Government in order to carry out the Senator's plan?
commnissions and bureaucrats will have to be suspended by, Mr. LONG. Yes.
lawful processes of the courts. Otherwise we shall have an Mr. TYDINGS. As I1 understand It-nd IC recite my
arbitrary rule which will become the standard, instead Of a ftigres from memory-the national income is around fifty or
judicial and a righteous and a justifiable rule, sixty billion dollars a year.
I now come to page 44 of the bill. I propose to strike out Mr. LONG. It was forty-two billion last year,
titles VIII and IX. Titles VIII and IX of the bill prescribe Mr. TYDINGS. From the forest, the factory, the mine,
the revenue which is to be raised in order to carry out unem- and the farm. That means, then, that the Federal Govern­
ployment relief. I desire to refer to those provisions briefly. ment alone would take the equivalent of one-fifth, or 20
I turn over to page 44 of the bill, and I find that a very percent, of all the earnings of everybody In 'the country
unusual set of taxes is proposed. spreading it pro rata first of all, for the purpose of the
The bill Proposes to tax those who are employed, and also, illustration. Is that eorrect?
in addition to the other provisions that require the State to Afr. LONG. it would be as much as that; but it does
levy taxes, provides for the levying of certain taxes by the not take the earnings, of course
 1935 CONGRESSIONAL RECORD-SENATE 9431
Mr. TYDINGS. I understand. The Senator's plan is, Mr. TYDINGS. So that more people would earn More
instead of raising the money in the present manner, to raise money and less people would earn less money?
It by inheritance taxes or by a capital levy? Mr. LONG. The figures show that.
Mr. LONG. A capital levy. Mr. TYDINGS. Has the Senator any Illustration In bis­
Mr. TYDINGS. What I am Interested in at this point is tory where this has been done successfully?
ascertaining whether the Senator has figures to show how Mr. LONG. I have the illustration of a few years back
long it would be if we make a capital levy, and then another in the United States, when we had a little bit less cen­
Year made a capital levy, and then another year make an- tralization of wealth, and our national income was around
other capital levy before the fortunes in the higher brackets, $95,000,000,000. I have the national surveys conducted
which, under the impulse of the plan as originally put out, under the Joint authority of the P. E. R. A. and the housing
would pay a considerable amount, would be diminished. authorities, which show that there actually was an income
Mr. LONG. They would be diminished, of $4,317 average per family available.
Mr. TYDINGS. At what point would the larger fortunes Mr. TYDINGS. Let me ask the Senator this question,
of the country be stabilized? and I am not taking issue with him. I am trying to develop
Mr. LONG. I should say in about 8 years. his thought, because he has spoken of this several times-
Mr. TYDINGS. What would be the maximum amount Of Mr. LONG. Several hundred times.
Mr. TYDINGS. And this question has always been In
money any person would be able to have, under the Senator'smy in.Spoeteeaorwewoginsuig
planthat more people would have $2,500,000 than he supposes
Mr. LONG. About two and a half million dollars. would have that suim. Where would we get the revenue In
Mr. TYDINGS. After we get down to two and a half case his calculation miscarried, to carry on this plan, after
millions, which is the outside amount any one individual the capital levy had mowed down the larger fortunes?
might have- Mr. LONG. I am coming to all that.
Mr. LONG. After about 8 years, I should say. Mr. TYDINGS. Let me say, in connection with this, that
Mr. TYDINGS. What amount of taxes would have to be the Senator must realize that the $3,500,000,000 of normal
levied on the two and a half million in order to raise the expenditures which we now have to meet are predicated
nine to ten billion dollars a year necessary, to operate the largely upon incomes derived on the larger fortunes.
Federal Government? Mr. LONG. That is right.
Mr. LONG. In the words of the Lord, we would not have Mr. TYDINGS. So that if we destroy the larger fortunes,
to raise any. we destroy also the incomes from those fortunes, and there­
Mr. TYDINGS. I can see how the Senator's plan would fore we would have to carry the income brackets down to
work the first 2 or 3 years; he has already anticipated my the man with less income in order to make up for the losses
question by agreeing that the larger fortunes would be on the man with more income.
diminished. Mr. LONG. That would be very fine.
Mr. LONG. That is right. Mr. TYDINGS. So that the man of moderate means
Mr. TYDINGS. Now I am trying to find out how the plan would have to pay more income tax in order to give the
would work after the larger fortunes had been diminished. Government the same return if the larger fortunes were
Mr. LONG. I shall be glad to come to that now. I had leveled. Is that correct?
Intended to come to it later, but since the Senator has raised Mr. LONG. Hardly. Let me illustrate, and answer the
the question, I will explain it right now. Senator's question as a whole. To begin with, the United
Mr. TYDIhTGS. I do not wish to interrupt the Sena- States Government would take in at the first drop of the
tor- hat somewhere between one hundred and one hundred and
Mr. LONG. I shall be glad to explain It right now. sixty-five billion dollars in wealth, not all cash, 'because
Mr. TYDINGS. The question arose in my mind from the there is not that much cash in the world, but from one
fact that I do not see how some of the States, as the Sena- hundred to one hundred and sixty-five billion dollars of
tor himself has pointed out, can raise the sums of money wealth based on the normal $421,000,000,000 of national
necessary to make the proposed plan effective, value in a normal year. That would mean that for a number
Mr. LONG. They cannot, of years the United States would be peaceably, regularly,
Mr. YDIGS.In
mny f te Sttesalrady he ed-and in an orderly manner conducting such sales, distribu­
eral Government is really carrying a large part of the load. tos n ragmnsa rps ootieadt n
If the States cannot match the plan, and the plan of the clude in an amendment to be proposed to title IX.
Senator is not feasible for one reason or another, it strikes when' heSntr rmMryadsid fe tetm
me that if the proposed act is to have real effect some means whnwe had whittled down the big fortunes to a x~aximum
of raising the money will have to be found other than taxing nftwo and one-half million dollars, what then, says the
theu tate
50 ercet.
to ut denator, would we do for money for social relicf? Where
Mr. LONG. The Senator is right, and I think I can ex Xwould we find the hundred millionaires to tax, after 10
years, we will say? Where would we find the men who
plain to the Senator very readily the answer to the question could contribute this money?
he has asked. Mr. President, this is the answer to that: The beautiful
Mr. TYDINGS. Does the Senator mind my asking thing~about it is that when we cut down the size of the big
another question, rather than wait for an answer? fortunes, when we level down the 10 billIonaires, and those
Mr. LONGT. I am glad to have the Senator ask his ques- With fortunes of five hundred million. and those with for­
tion. tunes of one hundred million. and those with fortunes of
Aft. TYDINGS. Perhaps the Senator can develop the ten million, so that the maximum fortune in this country
whole thing at one time. How many people in the United would be from a million to $3,000,000, there will be practi­
States would have two and a half million dollars' worth Of cally no such thing as a social-relief program. We will have
property after the Senator's plan had been in effect 10 years, no such Problem left, if we do as was said by the Pilgrims,
as near as he can estimate? as was said by the Bible, as was said in every law upon
Mr. LONG. There would be a much larger number of which this country was supposed to have been founded. If
millionaires than at the present time. This is only a guess, we will cut down these monstrous fortunes -to the point
but I should say there would be four times the number of where there will be only 600 people in the United States with
millionaires there are now. buying capacity and allow 24,000,000 famIlies to have buying
Mr. TYDINGS. The Senator feels that through a capital capacity, then the social-relief problem will become nil
levy and expenditures of the money the opportunities for Mr. TYDINGS. Mr. President. will the Senator yield
doing business would be increased? further?
Mr. LONG. There is no question about that. Mr. LONG. I yield.
9432 CONGRESSIONAL RECORD-SENATE JuNE 17
Mr. TYDINGS. let us take any one rich individual. I do Afr. TYDINGS. The Government would acquire niot
not like to be personal, but it Is necessary to have an l~lus- money, but property.
tration. Mr. LODNG. It would have to.
Mr. LONG. Take Rockefeller. Mr. TYDINGS. What becomes of the property after the
Mr. TYDINGS. Let us take Henry Ford. Government acquires It?
Mr. LONG. Take Rockefeller. He is better as an illus- Mr. LONG. Mr. President, I will answer that. Now we
tration. have gotten back pretty well to the Point. We have got only
Mr. TYDINGS. Suppose we take Henry Ford. who is sup- one more little place to go in this discussion. When the
posed to be a very wealthy man, and I suppose a great deal Government has acquired the property, the Government dis­
of his fortune is invested In an automobile manufacturing poses of that property.
plant, arnd in things kindred thereto. Mr. TYDINGS. If the Senator's answer is as I interpret
When we started the capital levy on Henry Ford, what It. namely, that the Government, in a period of 8 or 9 years,
would we get? We would certainly not get his money. is to level all the big fortunes down to two and a half mll­
Would the-Government take over his plant, or take an in- lion dollars--suppose then the Government acquires this
terest in it, or acquire so much stock in it? And who would property. It will be property. It will not be money. It Is
run the plant? Will the Senator explain? going to sell it again. I wish to know who in the country
Mr. LONG. I will take the case of Mr. Rockefeller, whom is going to have enough money to buy It when the Govern­
the Senator mentioned. [Laughter.] ment gets it and begins to sell It, when all the big fortunes
Mr. BARKLEY. Mr. President, will the Senator yield? of the country are to be taken away.
Mr. LONG. I yield. Mr. LONG. Mr. President, the Senator has not got his
Mr. BARKLEY. The Senator himself has used Henry arithmetic right.
Ford as an Illustration time and again. Mr. TYDINGS. Very well. I should like an answer to
Mr. LONG. I know; that is why I am using Rockefeller my question.
now. I have used Ford, and the Senator from Maryland Mr. LONG. If people with large fortunes are permitted
can read what I said, as the Senator from Kentucky, who to retain two and a half million dollars, then a little over
is already wise about it, did. three-fifths of the fortunes are left Intact. We still have
I will use the case of Mr. Rockefeller because it is a much three-fifths of the fortunes left intact. We are not going
better illustration. Let us say that Mr. Rockefeller has to sell this property all in the first year, nor in the second
a fortune of $iO,0OO.OOOOOO. Let us put it at the outside year, nor perhaps in the third year, but the Government
figure, $1O,OOO.OOOOOO; and it is that much. Rockefeller's will make such division and disposition of this property as
fortune amounts to $10,000,000,000. The Mellon fortune is necessary to carry out the purposes of the law, the pur­
was shown to be up in the billions. They claim it is in the poses of the Government, and the building up of the corn­
hundred millions, but it is in the billions, as better reports mon man from the bottom. There are a dozen ways to do
I have studied show, that.
Let us take Mr. Rockefeller's fortune at $l000,000,000OO. Mr. TYDINGS. Mr. President, will the Senator further
Does it not have to be divided when he dies? It is said yield?
that we cannot redistribute the fortune of Rockefeller; but Mr. LONG. I yield.
if Rockefeller dies, all of it has to be redistributed, and Mr. TYDINGS. I do not know the financial worth of any
before we had the inheritance laws, such a fortune would of the Members of the Senate; but there Is not a man in this
have had to go back to the Government. body, whatever his worth may be, who has that worth in
Remember inheritance is an artifice of the law. Under money. The men who would retain two and a half million
the common law there was no such thing as a man giving dollars' worth of property under the Senator's plan do not
his children his property; it all went to the government, have their worth in money; they have it In property or in
Inheritances were a means of artificial support granted by investments.
the law by which children inherited the fortunes of their Mr. LONG. That Is true.
parents. Under the common law, which survived for years Mr. TYDINGS. Therefore they could not buy what the
and years before we ever heard of the law of inheritance, all Goverrnment was going to sell unless they first sold what they
property went to the government on the death of a man and themselves had.
had to be redistributed by the government. So this is noth- Mr. LONG. No, Mr. President; I would not have them sell.
ing new. I would have them give the Government of their property in
Second, what would we do in this specific case? I have an kid.
amendment to offer, and I will explain what we would do. Mr. TYDINGS. The Senator does not understand my
Let us assume that Mr. Rockefeller died. So much can go question. I say, assuming that the Government has ac­
to one heir. So much can be retained by him as he signifies. quired this property through a capital levy, and begins to
He can take out whatever he may desire from his profits. He sell It, it must, perforce, sell It to the men who have, we wil?
can pay it in cash. He can pay it in kind. He can retain say, large fortunes.
such ownership as he may desire of the property, which he Mr. LONG. No, no. Why? Are we not going to let any­
may have up to the limit the law allows. In this case about one buy anything except the man who has over two and a
seven or eight million dollars would be the limit he could half million dollars?
retain after the first few years, and he would naturally have Mr. TYDINGS. Oh, no; but I am talking about the time
to whittle down as the years went by. when no man has more than two and a half million dollars.
Mr. TYDINGS. Wr. President, will the Senator yield Mr. LONG. Flinel
further? Mr. TYDINGS. I say, then, that when the Government
M/r. LONG. I yield, assumes to sell these tremendous, big blocks of property-
Mr. TYDINGS. The Senator, however, ought to make a Mr. LONG. Oh, no; they do not have to sell it In big
distinction. When one of Mr. Rockefeller's children or five blocks. We will whittle those things down a little.
or six of his children have his fortune divided among them- Mr. TYDINGS. They acquire it In big blocks, and they
selves, they simply inherit securities. The Senator now in- acquire it in the form of property.
ferentially answers ray question. Does he mean that the Mr. LONG. No; they acquire it in the form of securities
Government would have given to it, in lieu of money, a cer- or representation of property.
tain percentage of the securities which Mr. Rockefeller Mr. TYDINGS. So in order to buy what the Government
owned, such as an heir at law would receive? must sell, as the Senator says, a man not having hIds for­
Mr. LONG. It could;, yes. tune in the form of money must first sell what he has his
Mr. TYDINGS. Then the Senator's plan would be that two and a half million dollars invested in, in order to get the
the Government would acquire-- money to pay for what the Government to selling.
Air. LONG. Property. Mr. LONG. Not necessarily.
 1935 CONGRESSIONAL RECORD-SENATE 9433
Mr. TYDINGS. How can he pay for It then? erty ownership and ownership of wealth have been decen­
Mr~. LONG. If the Senator will wait a moment I will tralized. Here is a man who can go into the grocery busi­
explain that. If it were not for the Senator's own confusion. ness. He can afford to bu~y a grocery store. Why? Be­
by reason of which he has been asking these questions. I cause those terms, those conditions, those times are at an
should have answered it. end when a large $100,000,000 capital structure which domi­
Mr. BONE. Mr. President, will the Senator yield? nates a chain-store enterprise squeezes everybody out of
Mr. LONG. Let me answer the Senator from Maryland. the grocery business except some man who is a peon under
To begin with, the Senator would urge that we cannot re- the chain-store system. Those times are at an end. Those
distribute wealth. things known as the "chain factories, the chain banks, and
Mr. TYDINGS. No; I do not urge that, the chain enterprises " cannot thrive, and therefore peonage
Mr. LONG. Let me get through with the answer to the in that service cannot thrive any longer. Those days are
Senator's question. The Senator asked me a question and at an end. Therefore there is an enlarged market for pur­
he does not permit me to answer, chasing, there is an enlarged market for thrift, there is an
Mr. TYDINGS. I do not wish to have the Senator from enlarged market for prosperity, and therefore with reason­
Louisiana put words in my mouth, able order and precision the United States Government
Mr. LONG. I beg the Senator's pardon. I did not intend would find a means for disposing of this property at eni­
to do that. hanced values through a reasonable period of time to a
Mr. TYDINGS. I asked the Senator a simple question. better-equipped purchasing public. That is no. 1.
How are these large property blocks to be purchased? No. 2. Let us say, however, that we find, as the Senator
Mr. LONG. 0. K.; I will come to that. I will come to intimates is the case, that there is a clog in the purchasing
that immediately. Then, when I have finished answering power. That being the case, the United States Government
that, I will come back and show the Senate the situation on would want to do what it has done under the Federal Reserve
basic Principles. bank laws and under the Federal land-bank laws. The
To begin with, has not the Federal Government time after United States Government would have the right to issue its-
time issued currency against its own assets? Let us say for own circulating currency based upon the property, which it
the sake of the argument that the United States Govern- owns, the same as it has done in the case of the Federal
ment finds a clogged market-which It will not find. It will Reserve banks and the Federal land banks.
find a market far more expansive when we have put pur- No. 3. There is a third process, and the Government can
chasing power into the hands of 24,000,000 families than It is adopt one or all of these, or even a dozen more expedients. I
now when there is a purchasing power in only 600 families, now come to the third process. There Is nothing to prevent
You will find a far more expansive purchasing market for the Government from making some disposition of this prop­
the goods and things of value In this country if you decen- erty in kind the same as my amendment proposes that taxes
tralize wealth than you find today when you only have 600 may be paid in kind. Those are the three main things.
buying resources. But let us forget that. The next point I answer to the question of 'be Senator is
Has not the United States Government always had the this: What would we do when the time came when we would
right, and does it not now, under the Federal land-bank laws, level the fortunes down to where no one owned more than
issue currency against assets, and does it not become circu- two and a half million dollars? Whom would we tax? Then.
Waing currency? Has not the United States Government Members of the Senate, is when our problem of social security
taken bonds, has not the United States Government taken has practically disappeared. There never was a country
even the portfolios of banks, consisting of mortgages and which kept its wealth reasonably distributed which ever had
notes, and issued currency? What Is to keep the United a panic. There never was a country which kept its property
States Government from issuing the same kind of circulat- diffused into the hands of the masses that ever had a calam­
ing currency in order to effect the redistribution I suggest? ity, and there never was a country which allowed its property
Mr. BARKLY. Mr. President, will the Senator yield for to become concentrated in the hands of the few that did
a question? not have disasters and depression.
Mr. LONG. No, Mr. President, not at this moment. I This country was founded upon the principle which I am
wish to complete my answer to the Senator from Maryland. n'w, trying to make some effort to expound. This country
That Is no. 2. was founded on this. principle. The day that the Pilgrims
There is a third way of doing. There is no trouble to landed in 1620, by a compact which had been signed July I
make a diffusion of this property. There is a third way. I of that year, they provided that every 7 years property would
pointed out two ways, and I will point out a third. There have to be redistributed, and every 7 years debts would have
is no particular harm in the United States Government, to be remitted.
if it did not have these other two methods which I have It Is no trouble to redistribute wealth, Mr. President. I
mentioned- have not had tbB mind and the capacity possessed by some
Mr. TYDINGS. Mr. President, will the Senator yield? of the abler Members of the Senate in connection with these
Mr. LONG. Just a moment, matters to help me in getting up a plan of the kind I am
Mr. TYDINGS. I do not want to interrupt the Senator. suggesting. I have done as much as I have explained to the
Mr. LONG. Wait till I get through with this point. Senator from Maryland with my own feeble mentality, and I
Mr. TYDINGS. I wish to point out that originally the find no one to say that It Is even an impossibility or an
Senator said the Government was going to sell that prop- impracticability.
erty. Now he has abandoned that principle. Mr. President, there Is no trouble to redistribute wealth.
Mr. LONG. Oh, not The Lord God in heaven says it has to be done. Not only
Mr. TYDINGS. Now he says the Government is going does He say it has to be done; He says a nation which does
to issue money against the property. not do it cannot survive. The Lord shows us in chapters and
Mr. LONG. No; I did not say that. The Senator does in paragraphs and in verses how He sent his apostles into
not understand me. His eyes may be like mine-blind and countries where the wealth became concentrated in the hands
see not. However, what I have said I will repeat to the of a few people, and how they did redivide It, and how they
Senator. The point Is, the Government, as I said. will did redistribute it. He says that the time will come, even in
undertake to release and to diffuse this property to the this generation-
advantage of the Government and to its people, into the The VICE PRESIDENT. The time has, axrrved when the
hands other than the Government. agreement goes into effect. The Senator from Louisiana Is
How would it make this distribution of $165,000,000,000 recognized,
worth of Property? It does not have to make It all the first Mr. LONG. 3Ihave 45 minutes on the bin, have 3Inot, and
day, or the first month, the first year, nor even the first 30 minutes on the amendment?
10 years. How can It do it? The Government first finds an The VICE PRESIDENT. The Senator's statement in cow-
enjarged purchasing market to begin with, because prop- mt.L
9434 CONGRESSIONAL RECORD-SENATE JUNE 17
Mr. LONG. I will try not to take that much time, because the wealth, instead of concentrating wealth, and today there
I desire to allow time for other discussion. I will not take are no large fortunes in France. Despite the fact that
much of my time. I want to allow time for others to con- France has had scourge after scourge, despite the fact that
sider this bill and I want to allow time to come back and she has fought war after war and endured pestilence and
answer questions which may arise in anyone's mind, everything else, nonetheless, France has been able to survive,
Mr. BONE. Mr. President- due to the fact that its wealth has been more or less dis­
The VICE PRESIDENT. Does the Senator from Louisiana tributed among the people and cannot be concentrated into
yield to the Senator from Washington? the hands of a few. Had France had what America has had.
Mr. LONG. I yield to my friend from Washington. Prance would have been swept from the face of the globe
Mr. BONE. Can the Senator name for me any country more than a hundred years ago. That is no. 1.
in modern times that has ever undertaken a redistribution The second illustration is the United States of America.
of wealth? I have referred to what took place during and following
Mr. LONG. What does the Senator call " modern times "? the French Revolution. But where did they get the Idea?
Mr. BONE. The last hundred or two hundred years. They got it from America. The French Revolution was
Mr. LONG. Will the Senator make it 300? brought on as a result of the American Revolution, and as
Mr. BONE. I will concede that much, then, and make it the result of events which preceded the American Revo­
300. lution.
Mr. LONG. Very well. The first country I will name that What had the Americans done? They had set up on the
has redistributed wealth during the la.st 300 years is America. eastern coast, after landing at Plymouth, the compact of the
Mr. BONE. What was the period of that redistribution? Pilgrims. Article 5 of the compact, which was the law under
Mr. LONG. Beginning with 1620 and lasting for 50 or 60 which the Pilgrims landed, under which they lived, and
years. which brought this country into flower and bloom, stipulated
Mr. BONE. There were then a mere handful of people that at the end of every seventh year-and, mind you, I am
along the Atlantic seaboard. I am talking about a country giving the exact literal words as they come from the law-
that has had its civilization well established and not merely debts should be remitted and every seventh year wealth
a group of settlers who were fighting for existence with their should be redistributed. That is the cause of the flower and
back to he wll.bloom of America, so much so that when this country framed
Mr. LONG. Very well. I1will name Prance in about 1800. a Declaration of Independence that principle was carried
Do I need to prove that? The whole cause of the French into the Declaration of Independence, and when our fore­
Revolution was the concentration of wealth in the hands of fathers wrote the Constitution of the United States that pri­
a few. The French people went through blood. What did ciple was incorporated in the Constitution. James Madison,
they do? They not- only effected a redistribution of wealth who was the chief draftsman of the Constitution of the
but France enacted laws which forbade and prevented, from United States, gave out a statement about that time in which
the day of the French Revolution, the concentration Of he said that this would then be a free republic, but he warned
wealth in the hands of a few. America that if it failed to redistribute wealth when the time
Mr. TYDINGS. Mr. President, will the Senator yield? came the country could not survive and there would be no
The VICE PRESIDENT. Does the Senator from Louisi- republic left. So Daniel Webster, In 1820, at the commnemo­
ana yield to the Senator from Maryland? ration of the two hundredth anniversary of the landing of
Mr. LONG. I yield. the Pilgrims at Plymouth, made a speech there in which he
Mr. TYDINGS. The Senator could take a more modern said, in effect, that America's future preservation and prog­
illustration and cite the revolution in Russia. rs n efr eedduo hte twudo ol
SeLNa.N;tor' pRdosin; they subtituedisanut oelgrhy not follow the law of the Pilgrims and redistribute the wealth
Ibeg the Sntrspro;tesusiueanogrcyof this country and prevent it from being concentrated Into
of government for an oligarchy of finance; that is the dif- the hands of a few.
ference. The czar still lives in Russia. The only differ- Tosarsmexmps;btIwlgienthrxml,
ence is that it is supposed to be an ownership of govern- Thsarsoexmps;btIwlgieatereml,
ment instead of an ownership of the earls, dukes, and lords. if I may be permitted to do so. I turn to the fifth chapter of
One is an oligarchy of finance, the other is an oligarchy the Book of Nehemiah in the Old Testament to show what
of goverrnment; and one is as bad as the other. We, too, they then did. and to show the rules under which they did It,
have been going along that line here for the last few years. Here is the book. I read it once on the floor of the Senate,
It is the N. R. A. of Russia the Senator from Maryland but I will read it again. I quote from the fifth chapter of the
is referring to now. [Laughter in the galleries.]BokfNemih
The VICE PRESIDENT. The occupants of the galleries And there was a great cry, of the people and of their wives
willrefainfro
an
an auibl
willrefainfro demnstatin, rr te
auibl demnstatin, te Cairagainst
Cair their were
For there brethren, the Jews.
that said, we, our sons, and our daughters, are
will have to order the galleries cleared. many: therefore we take up corn for them, that we may eat, and
Mr. LONG. What did they do in France? France had live.
Its revolution. When we read the histories we get very Some also there were that said, We have mortgaged our lands-­
little from them, as they keep out most of the facts. We This reads like the conditions in the United States of
do not find in a single school history published in the America in the year 1935; one might think I was reading
United States today the compact of government under about the United States in 1935.
which this Government lived for nearly a hundred years; We have mortgaged our lands, vineyards, and houses, that we
we do not find it published at all, might buy corn, because of the dearth.
Howeer,
e ge bak et towha Frace id. hen There were also that said, We have borrowed money' for the
they got through redistributing wealth in France they knstiue
adopted the provisions of the civil law under which it was We have borrowed money to pay the taxe which are being
provided that when a man died he could not leave his prp levied on the people, and we are now talking about putting
erty to the most able son or the most able daughter to roll more taxes on the working man, the farmer, the home
like a snowball down hill through another generation. on owner, when they have already borrowed money and mort­
the contrary, it had to be divided, more or less equally, gaged their homes and property to pay taxes that have al­
amongst all the children, and a certain amount of it had to rea~dy been levied on them. That sounds like 1935 In the
go to the state; so if a man had, say, five children and died United States of America.
leaving a million dollars or even $500, it went Into five Again I quote from the same chapter of the Bible.
Parts after the Government had deducted a part. That There were also that said, we have borrowed money for the king's
was the law. As those children died in succeeding years tribute and that upon our landsn and vineyards.
the ivied
roprtywasnto an 4 nd 5othr ~ Yet now our flesh is as the Saesh of our brethren, our childrea
the eropectyo the fortunes inof 3rance4 wasd te at.a their children: and, lo. we bring into bondage our sons and out
1935 CONGRESSIONAL RECORD-SENATE 9435
We have that condition In America today. Lo, we bring There Is your redistribution of wealth. Now', go over in
into bondage our sons and our daughters. Today every boy the New Testament, and you will find It again:
and every girl who are born in America inherit a debt of They shall beat their swords Into ploughsharesl, and their
$2,000, or more than that, and 99 percent of them die with- spear into prunlnghooks; nations shall not lift; up sword against
out ever paying the $2,000. Of the national income of Amer- nation, neither shall they learn war any more, but each man
Ica, amounting to $42,000,000,000, $28,000,000,000 or two- shall lie u nde thisow lane ndne.hsn re.ad
thirds of It goes for taxes and for interest on debts the people h1bepa itelnd
owe, and the debts are increasing year by year. The debts You winl find it in the Old Testament and you will find it
of the common people are not decreasing: they are increas- in the New Testament.
ing. I am showing you how closely parallel this excerpt Not only is it the law of the Bible, but it is the foundation
from the Bible is to present conditions, of this country. It is the very foundation of the French
Andlowe
Ino bndae
rin or sns nd ur augter toRepublic. and it is also carried in the main writings of the.
be servants, and some of our daughters are brought unto bondage wrdi rnilsli onb rsolScaePao
already: neither is it in our power to redeem them; for other and all the ancient Greek wise men. I have even found It
men have our lands and vineyards, to be propounded by Confucius as the law for China.
And I was very angry when I heard their cry and these words. I ami not alone In my prophecy. I have one of the lead-
Then I consulted with myself, and I rebuked the nobles and
the rulers, and said unto them. Ye exact usury, every one of hi- ing newspapers in the country which less than 2 months ago
brother. And I set a great assembly against them, made an examination of these matters of which I am now
He called out the mob. speaking. They made the examination to prove that my
And I said unto them, We after our ability have redeemed orfacts were not there, to prove that my logic was faulty.
brethren the Jews, which were sold unto the heathen: and williy What did they say, this newspaper which calls itself the New
even sell Your brethren? or shall they be sold unto us? Then York Daily News, with the largest circulation of any news-
held they their peace, and found nothing to answer, paper in America? It said that unless America finds a way
Also I said, It is not good that ye do: ought ye not to walk in to redistribute its wealth into the hands of the people by
the fear of our God because of the reproach of the heathen ourlaanoreypocswcnexctItobdneybod
enemles?laanorelprcswcaexetitobdoebbod
I likewise, and my brethren, and my servants, might exact of and by force and by revolution like it was done in France and
them money and corn: I pray you, let us leave off this usury. as occurred in Russia. That is their prophecy.
Restore-- Mr. BONE. Mr. President, will the Senator yield?
Here is the command of the Lord- The VICE PRESIDENT. Does the Senator from LouljSi­
Restore, I pray you, to them, even this day, their lands, their ana yield to the Senator from Washington?
vineyards, their ollveyards. and their houses, also the hundredth Mr. LONG. I yield.
part of the money- Mr. BONE. The Senator apparently has done an excel­
Give them some of the money, too- lent Job in deflating fortunes under the amendment whichL
and of the corn, the wine, and the oil, that ye exact of them, he has offered. I may be in error, but a hasty calculation
Then said they. We will restore them, and will require nothing suggests on the $10,000,000,000 fortune which the Senator
of them; so will we do as thou sayest. Then I called the priests, has used as an example, the first year's levy, under the
and took an oath of them, that they should do according to thi seao'amn etwultkeprxmtly9prct
promise.Seao'amnmnwoltaeapomtey9prct
Also!I shook my lap, and said, So God shake out every man of the $10,000.000,O00.
from his house, and from his labour, that performeth not this Mr. LONG. Oh, yes.
promise, even thus be he shaken out, and emptied. And all the Mr. BONE. In other words, the Senator's amendment
congregation said, Amen, and praised the Lord. And the people
did according to th. po I wsapontdtob provides that " In addition to other taxes levied -Iassume
Moreover from the time that Iwsapitdobetheir gov7- that means the present business taxes?
ernor In the land of Judah, from the twentieth year even unto Mr. LONG. Income and inheritance taxes.
the two and thirtieth year of Artakerxes the king, that is, twelve Mr. BONE. Then there shall be annually levied and col­
years, I and my brethren have not eaten the bread of the governor. lected a tax in accordance with certain provisions, begin­
In other words, he got down off his " high horse.' They ning at 1 percent, and then all through by gradation to
pulled those big rulers down. They said, "1Never mind the subdivision (h), which provides for 99 percent on fortunes
castles in Spain for the month of August. Never mind about in excess of $8,000,000. The calculation I have made shows
that camp in the Adirondacks for the month of July. Never that the first year's levy would take out of the $10,000,000,­
mind about the palace on the Pacific slope, and the various ooo a total tax of $9,893,350,000.
and sundry cottages up in thc Buffalo Mountains during the Mr. LONG. How much would It leave?
month of June. Never mind about the palaces on the coast Mr. BONE. It would leave $106,650,000. The second
of Florida in the month of January. Get down here and year's tax would be $98,933,500, leaving at the end of the
let these people have something to eat during these hard second year, out of the $10,000,000,000 fortune, $7,716,500.
times." So we said. " Give up the bread of the rulers and By two levies made under the Senator's amendment the
get down off your ' high horse' until we bring this country $10,000,000.000 fortune would be reduced to $7,716,500.
back. Never mind about the yachts like the $5,000,000 That is deflating large fortunes with a rapidity which is
Nourmahal. Live according to Hoyle." [Laughter.] statlng.
But the former governors that had been before me were charge- Mr. LONG. It is not quite fast enough at that. It ought
able unto the people, and had taken of them bread and wine, to be done faster than that. A man has no business withx
beside 40 shekels of silver; yea, even their servants bare rule over;
the people: but so did not I. because of the fear of God. $7.000,000 during this kind of times.
Yea, also I continued in the work of this wall, neither bought Mr. BONE. The Senator referred to France as not having
we any land: and all my servants were gathered thither unto the any concentration of wealth, but I want the Senator to know
work, that of the total wealth of the world in 1929, when careful
Moreover, there were at my table an hundred and fifty of the suiswr ae rnepsesd54preto h ol'
Jews and rulers- suiswrmae rnepsesd54pretothwrl'
wealth, so that France did not have very much wealth to
That was the ruling family which owned all the prop- concentrate. The United States had 44.8 percent of the
erty-150 families. Today at the very most the United world's wealthso, of course, it was much easier for large
States has 600 families with a much larger population- aggregations of wealth to come into existence in this Re­
besidq those that came unto us from among the heathen that pUbllc, than it Was In a Country, possessing only 5 percent of
are about u15 the world's total aggregation of wealth.
Now. .that which was prepared for me daily was 1 ox and a
choice sheep; also fowls were prepared for me, and once In 10 Mr. LONG. On the contrary in countries which did not
days atore of all sorts of wine: yet for all this required not I the have any larger percentage of wealth than France, there
bread of the governor, because the bondage was heavy upon this were some very big fortunes. What percentage of the
people.
Think upon me. my God. for good acodn to ata I hav wealth of the world has Tndfia?
done for thiS people. Mr. BONE. Iindia had 3.2 percent.
9436 CONGRESSIONAL RECORD-SENATE JUNE 17
Mr. LONG. India has fortunes almost as large as some what they thought was the trouble in this country back
of the big fortunes In America. it is not the size of the yonder at a time when they first had this question up.
national wealth that controls the big fortunes. While France I want to find the majority report. it 'will not take me
has 5 percent of the entire wealth of the world and has rela- long to find it if I do, not unduly tax the patience of my
tively no such thing as a big fortune In it and its wealth is friends. I will read the whole thing. My friend from Wash­
well distributed, yet In India, which possesses only, 3 per- ington and I will get together on his own book.
cent of the wealth, there are many rich rulers to be found. let me see. It is somewhere here. if I can Just find it.
The Indian princes and Indian rulers are exceptionally I know this is the same book. Where is the report of the
wealthy people, and yet they have the lord prince at the top majority of the Commission? Does the Senator know on
with every kind of precious possession, and at -the bottom what page It is to be found?
the Indian people are living away below a respectable point Mr. BONE. I cannot put my finger on it. If the Senator
of half-way starvation. It makes no difference about what will give it to me, I will endeavor to find it.
percent of the wealth of the world a country may own Mr. LONG. I shall have it in just a minute. I will show.
insofar as it relates to distribution. Mr. President, that this matter of the redistribution of wealth
Let me say this to the Senator from Washington: It is is Just like the weather'. They all talk about it; my friend
true that this is deflating the big fortunes very quickly, but from Washington talks about: I talk about it; the party
it needs to be done that way. I am standing in nearly the talks about it; but nobody does anything about it. Thney anl
same spot where I stood a little over 3 years ago. fliree believe in getting up and telling the people that they are
years ago, from the place where my friend the Senator from going to redistribute wealth, but they do not believe in doing
New Jersey [Mr. MOORE] now sits, or at about that point, I anything about it. I have never seen another bill here since
made the statement under Mr. Hoover: "This is 1932 and I have been here, except the bills I have proposed, to do this.
we will go along with these experiments and we will never and yet the Democratic Party and the Democratic commit­
bring America 1 foot nearer recovery, we will never improve tees always say that they are going to redistribute wealth.
conditions one bit, unless there is a redistribution of It got to be so popular during the last campaign that in Mad­
wealth." That was 3 years ago. We have tried nearly ison Square Garden our old friend, Herbert Hoover. decided
everything under Mr. Hoover and under Mr. Roosevelt that he had to say something about it, too; and he declared, ini
anybody could think of. We have tried every kind of his expiring political moments there-a kind of a death-bed
scheme, both liberal and radical. We have tried every kind repentance, though it might have been-
of scheme of both the tories and the conservatives. Evry My conception of America is a land where the wealth is not con­
thing has been tried in 3 years' time. I invite the attention centrated in the bands of the few, but where It Is diffused Into the
of my friend from Washington that the Democratic Party lives of anl.
promised to do this. The Democratic Party promised it He made that declaration himself along toward the close
would redistribute the wealth, The Democratic Party of the campaign, after we had gone over the United states
promised to do it. promising everybody that we were going to do It under the
If anybody wishes me to prove that statement, I shall Dmocati Party.
have no diffculty whatever in doing so by reading from the I1have found just about the place here, Mr. President. I
speech delivered from the rostrum of the Democratic Na- will get it if I may yield the floor for a moment, I suggest
tional Convention at Chicago by the President of the the absence of a quorum while I look it up.
United States, wherein he said that by that platform and ThVIEP SDN. eclrwllaltero.
by that convention the men and women of the United States, TeVC RSDN.Tecekwl alterI
forgotten in the philosophy of the last 2 years' govern- The legislative clerk called the roll, and the following Sen­
ment, were looking to the Democratic Party to provide for ators answered to their names:
th eisrbtono
h ntoa wat.Adams Coolidge Logan Reynolds
thArdstiutouorhentinl elt.Copeland Lonergan Robinson
We promised the people to do that. I desire to say that Austin Costigan Long RI, ea
I am willing to be liberal in framing this law, and if it is Bachmana Davis McAdoo Schall
thf osnu
pnoBhtiniiul uhtt ea-Riley Dickinson mccarran Schweflenbach
th cnsnssofopnintht ndvdulsouh t b a-Bnnkhead Donahey McGill Sheppard
lowed to own more than five or six or seven or eight million Barkley luffy' McKeilar ShIpstead
dollars. I am willing to be more liberal in the amendment; BuoFece McNary Smith
but is it the idea of the Senator from Washington that Bone George Metcalf Thomas. Okia.
individual fortunes in the United States should be allowed Boa er Minton Townsend
Brown Gibson Moore Trammell
to exceed five or six million dollars? I should like the Bulkey Guffey Murphy Truman
Senator to tell me who thinks there ought to be more than Bulow Hale Murray Tydings
that allowed to any one person. I think that is too much. Burke
Byrd Harrison
Hastings Neely
Norbeck Vandenberg
Van Nuys
Mr. BONE. Mr. President, since the Senator has spoken Byrnes Hatch Norris Wagner
directly to me, I will tell him that I was concerned in making C eappr Hayden O'Maboney Walsh
a ahmtclcluain adn o
a atemtialcacuatonotmain aiga a aguen ruetCaraway
CavzKing JohnsonL Overton
Pittman Wheeler
White
about the size of fortunes which might be Justified under Clark La Follette Pope
the Senator's amendment. I had discussed the maldistri- Connfllly Lewis Radcliffe
bution. of wealth a thousand times before I had the pleasure M~r. LEWIS. I reannounce the absence of Senators whose
of meeting the Senator from Louisiana. In fact, I had names were given by me, and the reasons theref or. as
occasion to discuss it for a great many years; and I hold announced on the previous roll calL.
in my hand a volume which is the final report of the Corn- The VICE PRESIDENT. Eighty-six Senators have an­
mission on Industrial Relations, which I procured about the swered to their names. A quorum is Present. The Senator
year 1915 or 1918- from Louisiana has the floor.
Mr. LONG. 1916. Mr. LONG. Mr. President, I now wish to read from tMe
Mr. BONE. A subject in which I was Interested many, report of the Industrial Relations Commission of 1916,
anly' year ago under the heading, Concentration of Wealth and Influence,
Mr. LONG. Let me have the book, and I will read the on page 80. It is as follows:
Senator something from It. The evidence developed by the hearings and investigations Of
Mr. BONE. I should be happy to have the Senator put the Commission is the basis for the foilowinog statements'.
It in the CONGREssioNAL RECORD. I. The control of manufacturing, minIng, and transportation
industries is to an Increasing degree passing into 'the bandls at
Mr. LONG. No; I will read from this book that the Sena- great corporations through stock ownership, and control of Credit
tor read from since 1916. Let me show the Senate what they is centralized in a comparatively -smill number of enormously
said was the trouble with this country in 1916. I am glad to powerful flinancial Institutions. These financlia lnStItIUtlOM ar
run
bok cros tis Lt m
gai. mefin th cocluion
conlusonsofnof
turn dominated by a single large corporatlon.
2. The final control of American Industry rests, therefore In
ran
ook crosgai.tis It fid th
the majority of the Commission. I Will read to the Senate the hands of a s-all number of wealthy and powerful ft-soci
 1935 CONGRESSIONAL RECORD--SENATE 9437
3. The concentration of ownership and control Is greatest in individual amendments were offered. The Chair Is informed
the basic Industries upon which the welfare of the country must that there is a committee amendment which has not been
finally rest.
4. With few exceptions, each of the great basic industries is agreed to. The Chair did not know that, but assumed that
dominated by a single large corporation, and where this is not the agreement had been carried out.
true, the control of the industry through stock ownership In sup- Mr. HARRISON. Mr. President-­
posedly independent corporations and through credit Is almost, h IEPEIET osteSntrfo ot
If not quite, as potent.ThVIEPEIET DosteSnorfmSuh
5. In such corporations, in spite of the large number of stock- Dakota yield to the Senator from Mississippi?
holders, the control through actual stock ownership rests with Mr. NORBECK. I yield.
a very small number of persons. For example, In the United Mr. HARRISON. There is one committee amendment.
States Steel Corporation, which had In 1911 approximately 100 000
shareholders, 1.5 percent of the stockholders held 57 percent of with reference to the annuity bonds, yet to be acted on.
the stock, while the final control rested with a single private The Senator from Connecticut is very much Interested in
banking house. Similarly, In the American Tobacco Co., before it, and I ask unanimous consent that the amendment may
the dissolution, 10 stockholders owned 60 percent of the stock. goveunitmrowwth tpejdcadhtid­
That was the American Tobacco Co., the whole Tobacco vidual amendments may be acted on at this time.
Trust. Ten men owned 60 percent of the entire American The VICE PRESIDENT. The Senator from Mississippi
Tobacco Co. asks unanimous consent that the remaining committee
6. Almost without exception the employees of the large corpora- amendment may go over until tomorrow. Is there objection?
tions are unorganized, as a result of the active and aggressive The Chair hears none, and it is so ordered.
nonunion policy of the corporation managements. Mr. NORBECK. Mr. President, I desire to offer an amend­
Mr. President, I shall not read any further from this par- ment providing for pensions to those people who are not
ticular report, except to say that at another point in this included in the social-security bNl. I have reference to the
report will be found the statement that the main fault with wards of the Government, the Indians. They are concen­
America in 1916 was the concentration of wealth in the trated in half a dozen States and seem to have been entirely
hands of the few. That was the entire burden of this report, overlooked. I am offering the amendment as section 1201
which was submitted in 1915. and will ask that the other sections be renumbered to cor­
Mr. President, I do not propose to take any more of the respond, if the amendment shall be agreed to.
time of Senators. I have discussed this amendment many The PRESIDING OFFCER. The clerk will state the
times In other forms. I do not expect it to be adopted. I amendment.
desire to be perfectly frank with my good friends in the The CHIEF CLERK. On page 80, after line 4, it Is proposed
Senate. I do not expect the amendment to be adopted. I to insert the following:
expect it to be used as part of the platforms in many, many Trr xnr" PzNSIoNs
candidacies for the future, as it has been in the past: and I ftcrioN 1201. That'heads of families and single persona of Indian
expect it probably to be used as a part of the platform of the blood not otherwise entitled to the benefits of this act who have
Democratic Party the next time, the same as it was the last heretofore attained or shall hereafter attain the age of 60 years are
time; and I expect the party to come back here, If it comes hereby
in a sumdeclared to be
of $30 per entitled
month, to a pension
subject from theconditions:
United States
to the following
back here, probably, if there are enough of us left, to do then Applications for pension by persons of Indian blood, as herein
as we are doing now; but I warn my friends of the Senate defined, shall be made In writing In such form as the Secretary of
that if we are concerned in saving America and in saving the Interior may prescribe and shall be filed by the applicant with
the superintendent or other officer in charge of the agency or tribe
the people of America, we shall have to stop promising this, to which the applicant belongs. Upon receipt of any such applIca­
and actually perform. tion the Secretary of the Interior shall make, or cause to be made.
Now I wish to ask my colleagues if they recollect how la- such Investigation as he may deem necessary to determine the
boriously the pleading was that the party had promised thlis accuracy of the facts shown thereon. Including the annual income
of the applicant from other sources. In all cases where the Secre­
and it had promised that a few days ago. tary of the Interior finds that the annual income of such applicant
I remember how we labored and how we said that this is less than $1 per day. said Secretary shall award to such applicant
was " promised by the party "', that " it has been promised, a pension in an amount which, when added to the other annual
it hs ben pomiedand
ee hve t doit. Yether
Yether weincome of such applicant, will bring such annual income up to but
It hs ben pomiedandhve t doit. wenot In excess of $1 per day: Provided, however, That payments to
are, in the third year of the Democratic administration, 'with Indian pensioners entitled hereunder shall be made in equal
something that has been promised, that has been pledged, monthly Installments from the date of approval of application
btntigdone toward its fulfillment. therefor by the Secretary of the Interior and in the discretion of
but nthingsaid Secretary such payments may be made direct to the Individual
Mr. SCHWELLENBACH. Mr. President- beneficiaries, or to other persons designated by the Secretary of the
The VICE PRESIDENT. Does the Senator from Louisi- Interior providing care for any beneficiary under the provisions of
aayield to the Senator from Washington? this act: Provided further, That in the discretion of the Secretary
ana LOG il.of the Interior such payments due any Indian beneficiary may be
handled In accordance with regulations governing Individual In­
Mr. SCHWELLENBACH. Has the Senator completed his dian money accounts and the Secretary of the Irterior Is hereby
discussion of his plan? authorized to prescribe such further rules and regulations as may
Mr. LONG. Go ahead, be necessary for carrying out the provisions of this section.
Mr. CHWLLEBACHI houd lie t as theSentor SEC. 1202. The Indians and Eskimos of Alaska shall receive a pen­
Mr. CHWLLEBACHI houd lie t as theSentorsion under same conditions and in an amount one-half that pro-
whether or not he was correctly quoted in yesterday morn- vided for Indians under this title.
Ing's paper to the effect that he referred to me as " Kemal Ssc. 1203. There Is hereby authorized to be appropriated an-
Pasha.~'nually, out of any money in the Treasury not otherwise appro-
Pasha."priated, so much as may be necessary to Carry out the provisions
Mr. LONG. No; I was not correctly quoted. of this act, Including necessary expenses of administration.
Mr. SCHWELLENBACH. The Senator was not correctly Mr. HARRISON. Mr. President, I desire to look the
quoted? amendment over and to have it examined by the experts. and
Mr. LONG. No; I was not correctly quoted. I ask the Senator if he will not withhold It.
Mr. BONE. Mr. President- Mr. NORBECK. Mr. President, I desire first to modify
The VICE PRESIDENT. Does the Senator from Lousi the amendment by changing tte age of 60 years so that It
ann yield for a question, or does he Yield the floor? will read 65 years to conform to the provisions of the bi1l.
Mr. LONG. I yield the floor. I agree to the suggestion of the Senator from Mlssissippi.
The VICE PRESIDENT. The question is on agreeing to Mr. HARRISON. I ask the Senator to withhold the
the amendment offered by the Senator from Loiiana. amendment until tomorrow, and we can look Into the matter.
The amendment was rejected. Mr. NORBECK. Will the amendment be pending tomor­
Mr. NORBECK. Mr. President, I desire to offer an amend- row?
ment. Mr. HARRISON. It may be tendered tomorrow.
The VICE PRESIDENT. The Chair is informed that there The VICE PRESIDENT. Doe the Chair understand the
was an agreement originally entered into by which commit- Senator from Mississippi to ask uinanimous consent that the
tee amendments should be considered and disposed of before amendment go over?
9438 CONGRESSIONAL RECORD--SENATE JUNE 17
Wir. HARRISON. The Senator from South Dakota bas plants of American industrial institutions established abroad
withdrawn his amendment for the present. for the purpose of taking advantage of the more attractive
The VICE PRESIDENT. The Senator from South Dakota foreign conditions.
has withdrawn his a'mendment. Except as we create this protected element which Is coy­
Mr. VANDENBERG. Mr. President, I offer an amendment. ered by this amendment, I submit that when we add a defi­
The VICE PRESIDENT. The clerk will state the amend- nite pay-roll tax in the United States, which will inevitably,
ment. in the same proportion, increase the American cost of produc­
The CHIEF CLERK. On page 52, after line '7, It is proposed tion, we put a premium upon the extension of the foreign
to insert the following: branch-plant system, which operates utterly at the expense
TARIFF ADJUSTMENT of American labor and American industry. We put a pre­
SEc. 812. (a) Upon application of any employer, the United mium on it unless this type of differential is provided.
States Tariff Commission is authorized and directed to make an Mr. President, let me go a step further. When we wrote
investigation under section 336 of the Tariff Act of 1930 with the late lamented N. R. A. law we recognized in the text of
a view to determining whether any lncrease In rates of duty im­
posed by law In the case of any article or articles is necessary to the bill the fact that if the Government by its fiat Injects any
offset the tax Imposed by section 804 and/or section 901 in order artificial factor into domestic costs of production, that factor
to equalize the differences in the cost of production pursuant to must be offset in respect to protected commodities by a corn-
the principles set forth in such section 336. The Co.mmissionpestnicraenrts.Fthmoewen ewoe
shall report to the President the results of the investigation andpestn icraenrts.Fthmowen ewoe
Its findings with respect to Such differences in costs of produc- the A. A. A. law we acknowledged precisely the same prin­
tion. If the Comnmiasson finds it shown by the investigation that ciple and we provided for precisely the same preferential
by reason of the taxes imposed by section 804 and/or section 901 treatment.
the duties imposed by law do not equalize the differences in the
cost of production of the domestic article and the like or similar It seems to me the situation which we confront In respect
foreign article when produced In the principal competing country, to pay-roll taxes is infinitely more challenging than was the
the Commission shall specify in Its report such Increases In rates need for protecting the differential In respect either to the
of duty imposed by law (including any necessary change in N. R. A. or the A. A. A., because in this Instance the factor
classification and including the transfer of the article from the free
list to the dutiable list, and without limitation as to the amount of which is being injected by Government fiat is a factor of
Increase except as provided in the second sentence of section 336 (g) definite and continuous and very substantial burden.
of the Tariff Act of 1930) as it finds shown by the investigation to For example, according to the estimates under this bill, the
be necessary to equalize such differences.
(b) Upon receipt 'of the report of the Tariff Commission the total cost by way of pay-roll taxes In 1940 will be $1,600,­
President shall proclaim the rates of duty and changes In classi- 000,000. By 1945 it will be $2,000,000,000. By 1950 it will be
fication specified in the report of the Commission, and thereupon nearly $3,000,000,000. That $3,000,000,000 element injected
the Increased rates of duty and changes In classification shall into the pay-roll cost of American industry is Injected
take effect in accordance with the provisions of section 338 (d) ueyInotecsofpdcinofheom dtesr­
of the Tariff Act of 1930. surl notecs fpouto ftecmoiispo
(c) This section shall be enforced as part of the customs laws. duced. Therefore, so long as we are continuing to live under
Mr. VANDENBERG. Mr. President, the philosophy of the a system which pretends, at least, to offset the difference in
amendment is self-evident. I make a very brief statement cost of production at home and abroad by tariff differentials,
respecting R. it is perfectly obvious to me that if there is to be any sem­
It is my understanding that the theory upon which we blance of a chance for the proposed law to succeed and pre­
are now asked to depart from State jurisdiction in respect vail it must contain within Itself the automatic means to
to fixing old-age pensions and unemployment-insurance pay- protect this $3,000,000,000 increased element in the domestic
ments is that if it be left to the individual States there will production cost, or the entire system will fall and fall.
be discrimination as between the States, and one State which I submitted the amendment last Saturday. I ask the able
may be generous in respect to old-age pension and unem- Senator from Mississippi [Mr. HARRISON] if he was able to
ployment-insurance payments will find itself at a disad- find the time to give it some attention over the week-end. I
vantage in competing with a State which is less generous, should like, in my time, if the Senator from Mississippi has
Admitting, for the sake of the argument, that this prin- anything to say to me at the moment upon the subject, that
ciple is appropriate-at any rate, it is the principle upon he shall say it.
which the proposed legislation is based-I submit that pre- Mr. HARRISON. Mr. President, I will say to the Sena­
cisely the same argument applies to the competition which tor that I have looked into the matter at length, and have
may exist between a country which is generous In respect conferred with the Tariff Commission. When the Senator
to its old-age and unemployment allowances and a country concludes, I shall make reply.
which Is less generous. Mr. VANDENBERG. Mr. President, I think I'have said
This becomes particularly and specifically true when we all that I wish to say until the Senator from Mississippi shall
are proposing to pay our bills by a tax upon pay rolls, have proceeded in respect to his own investigation.
because a tax upon pay rolls Inevitably enters into the do- Mr. HARRISON. Mr. President, it is quite true that in
mestic American cost of production in every instance, and respect to the N. R. A., because of the increased cost which
if the injection of the 3- or 4- or 5-percent pay-roll taxes might be involved by virtue of code provisions, and also with
in the United States will increase the domestic cost of pro- reference to the A. A. A., previsions were placed in the bills
duction to a point where the existing tariff rates do not that investigations might be carried on by the Tariff Corn-
cover the differential, then we shall have simply created a mission with a view of increasing the tariff duties. I have
situation by such pay-roll tax which will invite importa- communicated with the Tariff Commission, and I received
tions which will make it impossible for these protected a memorandum from the acting chairman, Mr. Page, in
American industries to have any pay rolls or pay any taxes, which be said:
It seems to me that if the philosophy is sound as between In compliance with your request, I am enclosing a memorandum
the States, it is equally sound, nay, more, it is even sounder which covers the subject as thoroughly as could be done In the
as between nations, and I shall undertake to demonstrate brief available time. As Indicated In It, the Commission doubts
that fact. the necessity or the advisability of Incorporating the amendment
It Is said that one State cannot be left with its problem ini the social-security bill.
alone, lest it find its Industries drawn off into some other It will be observed, Mr. President, that under the present
State which is not making payments of this character. Not law the Tariff Commission has the power, not to take ar­
only may we find the same thing to be true in respect to the ticles from the free list and put them on the dutiable list,
competitive situation as between nations, but we are put upon but to increase up to 50 percent the tariff duties on dutiable
notice by the industrial experience of the United States dur- articles; and it may take into consideration every factor
ing the last 10 years that there is a very definite industrial which may increase the cost of the particular article. So
trend by way of the exporation of our mass production there is nothing in this bill which would disturb the status
methods and mass production industrial plants in the United quo with reference to the Tariff Commission so as to pre­
States. In the last 10 years we have seen over 1,800 branch vent the Commission, upon the presentation of an &PPlica­
 1935 CONGRESSIONAL RECORD--SENATE 9439
tion by the interested parties, from making Investigation to Mr. ROBINSON. Mr. President, will the senator Yield
ascertain whether the tariff duties should be increased be- f or a further brief statement?
cause of the additional tax which might be imposed. Mr. HARRISON. I yield.
Mr. ROBINSON. Mr. President, will the Senator yield? Mr. ROBINSON. The Senator from Michigan himself has
Mr. VANDENBERG. I yield. pointed out another very material change in the law con­
Mr. ROBINSON. In the amendment it is provided that templated in his amendment. Neither the Tariff Commis­
when the Com~mission has made its investigation and sub- sion nor the President under the flexible-tariff provision has
mitted its report, the President is required to proclaim the the power to take a commodity from the free lis and
rates of duty recommended by the Commission. place It on the dutiable list. This amendment gives that;
Speaking a moment ago, the Senator from Mississippi power to the Commission, and under the Senator's state­
[Mr. HARRISON] indicated that the Commission now has the ment it means that there would hereafter be no free list.
power to change rates. My understanding of the statute is There probably would be no commodities imported free of
that the Commission makes an investigation as to the dif- duty if this amendment were agreed to.
ference between the cost of production at home and abroad, Mr. VANDENBERG. Mr. President, I am sure the Sena­
and Makes its findings of fact, upon which the President is tor is seeking accurately to reflect the amendment. There
authorized, within a limit of 50 percent of the existing is nothing of that mandatory character in it. however, be­
rates, to change the rates in order to make them conform to cause in each instance there must be an adequate demon­
the difference in the cost of production at home and abroad. stration of the fact that the pay-roll tax had penalized the
Mr. HARRISON. That is the present law, differential.
Mr. ROBINSON. This amendment gives to the Commis- Mr. ROBINSON. Yes: but I base my conclusion on the
sion the Power to make tariff rates. It changes the so-called assertion made by the Senator from Michigan that this would
"flexible provision " of the tariff law in that particular and apply to practically all commodities manufactured In the
vests in the Tariff Commission rate-making power. The United States and exported.
President has no function to perform under this amendment Mr. VANDENBERG. I meant to say that the philosophy
save to proclaim the rates recommended by the Commis- of the amendment ought to apply to all.
sion. He cannot change them. He cannot withhold this Mr. ROBINSON. Very well.
recommendation. It is compulsory on the President to put Mr. VANDENBERG. I meant the philosophy, and I think
into effect whatever rates the Commission may find in that is a fair interpretation. Whatever the facts develop
accordance with the investigation made under the terms should govern in the situation. That is what I am trying
of the amendment. Therefore, it constitutes a very radical to say.
and notable change in the existing flexible tariff law. Mr. ROBINSON. But the fact remains that It would give
Mr. HARRISON. Mr. President, the Senator from Arkan- to the Tariff Commission, without even approval by the Chief
sas is correct in reference to that question; but under the Executive, the power to take any article from the free list
present law the Tariff Commission has the right to make the and place it on the dutiable list.
investigation, and if sufficient evidence is presented the There is another proposed change in the law, if r cor­
Tariff Commission may recommend to the Pr,,,sident an rectly interpret the amendment-and I shall not further de­
Increase in rates, and the President may pass upon the lay the Senator from Mississippi when I shall have made
recommendation. this statement. The amendment eliminates the limitation
Mr. VANDENBERG. Mr. President, if the Senator makes In the existing flexible tariff provision whereby the Presi­
that point I desire to comment that I completely agree with dent is authorized, upon proper investigation and finding-by
the analysis made by the Senator from Arkansas, and say the Commission, to change existing tariff rates not more
that the change in the amendment was deliberately made, than 50 percent; that is, to raise or lower them 50 percent.
for two reasons. First, I desired, if possible, to reduce this As I interpret the amendment, it would give the Commission
delegated power to an absolutely ministerial basis, with the power to change them without any limitation. is that
discretion eliminated; and, therefore, the amendment car- correct?
ries a specific formula that only a ministerial duty attaches Mr. VANDENBERG. The Senator is correct, and the
to It. reason for it is that of course a 50-percent boundary could
Second, it is made mandatory for this reason: In my not apply to the free list. So far as I am concerned I
view, it is utterly essential to the success of this great ad- shall be glad to have it apply to the dutiable list.
venture that it shall have the wholehearted cooperation of Mr. ROBINSON. Under existing law the rates are
American industry; and it is my feeling, rightly or wrongly, changed to make a duty more nearly conform to the test of
that that cooperation will be forthcoming in infinitely cost of production. Nevertheless there is a limitation in
greater degree if Industry may know that the pay-roll taxes the law to the effect that rates may be changed only So
are to be offset by tariff increases whenever it can be percent; that Is, they may be raised 50 percent or they
demonstrated that the pay-roll taxes require the differential may be lowered 50 percent. In theory it might be true that
in order to preserve the relative status quo. an increase of 50 percent or a decrease of 50 percent would
Mr. HARRISON. I assume that there is no difference of not bring about harmony in cost of production at home and
opinion between the Senator from Michigan and myself as abroa~d.
to the right of the Tariff Commission now, on dutiable Mr. HARRISON. Mr. President, the amendment differs
articles, to take this fact into consideration in their recoin- from the present law in another respect in that in the pres­
mendations for an increase to the President of the United ent law any interested person may make the application.
States, while the amendment offered by -the Senator from M~ichi­
Mr. VANDENBERG. Mr. President, will the Senator gan provides " upon application of any employer to the
yield? United States Tariff Commission." Of course, under the
Mr. HARRISON. I yield. provisions levying one tax under the bill " employers"I in­
Mr. VANDENBERG. There Is no difference of opinion clude only those who employ four or more persons before
upon that subject. The chief necessity of the amendment, they are subject to tax, and with respect to this tax and
from my point of view, is that two-thirds of our importa- the other tax, there are certain exemptions. The amend­
tionreelistanyay;
ar on he nd inc thepayollment is really broader than the present tariff act and re­
tiox arples tonthe ofreer listusanywy andsincethe phay-roll stricts it to apl~bcations being made only by an employer.
taxofourindstryIt
pples o al eem to e tat he I should like to read to the Senator from Michigan and
ability and the formula for treating the pay-roll tax dif to the Senate the views of the Tariff Commission with re-
ferential should equally apply to all our industry, and ofspctohimaerTeatnghar nofheaif
course'the Senator will agree that It Lould not apply to al sCommston thsmattryhscin:himnofteTrf
our industry under the flexible-tariff law. Cmiso as
Mr. Itcoud
ARRSON nt aplyto ny ndutry Senator VANDnnmoesKR amendment makes it mandatory that
culdnot ppl to ~ Idl~~t~7upon request of any employer the Tariff Cominiision shall lave­
Mr. ARRION.It
whose articles were on the free list. tigate the domestic costs of production with a view to determinizng
 9440 CONGRESSIONAL RECORD-SENATE JuNE 17
whether any Increase In duty is necessary to offset Increased costs by the Committee on Ways and Means. We reached the
Incurred because of the provisions of sections 804 and 901 of the conclusion that in its present ftnancial condition the Fed­
act.
The Commission in its report to the President is to specify any eral Government is going as far as it can go. We feel there
increases found necessary. including changes In classification. In- ought to be a participation by the States and the Federal
vestigatiorns are to be conducted according to the principles of Government.
section 336 of the Tariff Act of 1930. but an article may be trans- ThSeaowilrcltathntefrsbllasp­
ferred from the free to the dutiable list and there is no limitation ThSeaowilrcltathntefrsbllasp­
upon the amount of the increase in the duty except the limitation sented in the Congress It provided for large Federal control
prescribed in the second sentence of paragraph 336 (g) which pre- over the whole question and that the Federal Government
cludes an increase In duty above a certain rate specified in the should in many respects direct the States as to whom should
act. Upon receipt of the Commission's report, the President mustreivapnso.TeHuefRpeettvsreatd
proclaim the changes found necessary.reevapeso.TeHuefRpeentisreatd
The increased coats under sections 804 and 901, which investi- the bill and I think greatly improved it. I am sure the
gations under thiG amendment are intended to protect, are as Senator thinks so, too.
follows: M.BRH o
Section 894 provides for an excise tax on employers, starting with M.BRB o
one-half of 1 percent of the pay roll in the period 1936-38 and Ivr. HARRISON. The Committee on Finance thought it
increasing to a maximum of 3 percent In 1948 and subsequent was greatly improved. We have here provided that the Ped­
90yrvieeoaatxonepoer o tepiilg feral Government shall contribute 50 percent, leaving it en-
Section 901 tirevydto teoStatesxtondetrmineewhichrperonspareiingneed
employing labor, the tax to be 1 percent of the cost of the labor trl oteSae odtriewihprosaei ed
In 1936. 2 percent in 1937. and 3 percent in 1938 and following the only requirement we make being that they shall have
years. reached the age of 65 Years. The States best know who are
During the first few years the Increase In costs of production tte oo
due to the tax would be slight. In and after 1948 for a particular entild ood-age benefits.
manufacturer where labor made up 25 percent of the cost his max!- I feel quite sure the situation has been somewhat exag­
mnur increaae would be 1 ~ percent. This percentage would in- gerated as to the inability of the States to provide their part
crease as the ratio of labor to total coat increased, of the money. Reference has been made to my own State.
Under section 336 of the Tariff Act of 1930, the Tariff Commnis- T
sion Is already empowered, on request of Interested parties, when Tere were some 14,000 on the unemployment and relief
In the judgment of the Commission there Is good and sufficient rolls in my State. I am sure every person over 65 years of
renson therefor, to Investigate, w~ith respect to any dutiable article, age who was in need sought to get on the unemployment
differences in cost of production here and abroad. Moreover, the orelief rolls in my State. My State is no worse off than
President is already empowered to proclaim such changes In the o
rates on dutiable articles as the Commission's investigation may other States in that respect. I am sure other States, like
Indicate to be necessary to equalize differcnces in foreign and do- Mississippi, have made heroic efforts to care for the situa­
mnestic costs (including taxes on pay rolls). This amendment tion. With the $4,000,000,000 of money that we have now
would make the investigation and the action by the President
mandatory, and his action might conflict with certain provisions available with which to create Jobs and take carr, of people
contained in trade agreements prohibiting the imposition of addl- in need. I feel quite sure the States can reasonably meet the
tional taxes. situation.
It should be added that under this amendment every employer I know there is a feeling that needy, aged persons ought
who chooses to do so may upon application compel the Tariff Com­
mission to Institute a coat-of-production investigation. A trivial to have more than $30 a month. There have been proposals
Increase in his costs might thus require the expenditure of large to give them More than $30 a month; but there is this to be
sums by the Government; the multitude of such applications said about it, that the aged people heretofore who have
would seriously impair the efficiency of the Tariff Commnission In eevdhl n sitnc aercie tfo h
discharging Its other duties. rcie epadassac aercie tfo h
It would, therefore, appear that the proposed amendment is County or from some charitable organization, or in sonie
neither necessary nor desirable. If, however, it were to be incor- instances it may have come from the State itself. The
porated In the act, It would be almost Imperative that the Tariff Federal Government has left the matter of assistance to the
Commission be given some discretion as to whether or not annedagdtthlolcmuiis.T thsbenrd-
Investigation and report were justified.nedagdtthlolcmuiis.T thsbenrd­
tional in this country. For the Federal Government now to
Therefore, Mr. President, it seems to me the amendment assist at all is a new venture, quite at variance with our past
should not be adopted, and I hope the Senate will reject it. record and history, and since the Federal Government here-
The VICE PRESIDENT. The question is on agreeing to tofore has contributed nothing toward old-age pensions,
the amendment of the Senator from Michigaan. certainly if we contribute 50 percent for their assistance
The amendment was rejected, now and hereafter, we shall have gone a long way and will
be carrying a blessing to these people and to the States.
It is a pleasure for me to champion this bill. I believe
in it, and while personally I wish the Government was in
such condition that it might go further, let me say this:
I care not how enthusiastic one may be in wishing to in­
crease this amount, or in wishing to relieve the States from
the burden of having to put up any portion of the amount,
I am sure those who have been working and laboring in
SOCIAL SECURITY this matter have done the very best they can, and that. it
The enae
cnsieraion
rsumd f te bll H. . 760)might complicate the situation greatly, and might defeat the
The enae
cnsieraion
rsumd f te bll H. . 760)whole purpose of the bill in the end, if we should strike out
to Provide for the general welfare by establishing a system of the Provision that the States must contribute toward this
Federal old-age benefits, and by enabling the several States fund their pro rata part, half of the total amount.
to make more adequate provision for aged persons, dependent So I hope the Senator from Idaho will not offer any
and crippled children, maternal and child welfare, public amendment to that effect. I am sure the committee would
health, and the administration of their unemployment-corn- feel obliged to oppose it, and I do not know whether it
pensation laws; to establish a Social Security Board; to raise would get through other barriers. You know what I mean.
revenue; and for other purposes. Mr. BORAH. Mr. President, of course, there Is no reflec­
Mr. BORAHR. Mr. President, I should like to !now from tion upon the performance of the comrnlttee's duty. It Is
the Senator from Missi.'sippi whether he is interested in a in no sense a reflection upon the work of the committee that
Proposal which was made this morning with reference to upon a particular feature of the bill one may entertain a
increasing the amount which the Federal Government shall view which is different from that of the co'nmittee.
contribute to taking care of the situation where the States If these were normal times and normal conditions I should
may not contribute anything whatever, feel entirely differently about this matter; but I know that
Mr. HARRISON. Mr. President, I may say to the Senator a number of the States are not in a position to make any
from Idaho that that is one phase of the question which was substantial contribution. I should like to leave in the bill
given every consideration by the Committee on Finance and the provision that the State must make some contribution.
 1935 CONGRESSIONAL RECORD"-SENATE 9441
However small it may be, I think the State ought to be Mr. ROBINSON. Mr. President, will the Senator yield?
called into action with regard to the matter. I quite agree Mr. BORAH. I yield.
with that contention; but where the States are able to sup- Mr. ROBINSON. Therein lies a diffculty which suggests
Ply only something like six or eight dollars a month, and we itself to my mind with great force.
contribute six or eight dollars a month, we are leaving these We all realize, of course, that, it is probably Impracticable
old people with a total of only some twelve or fourteen or now to effectuate any arrangement which will constitute a.
sixteen dollars a month upon which to live, final and a permanent basis for old-age pensions. Neverthe-
As I say, if the times were normal, a wholly different less, unless we have well defined in the law what portion of
problem would be presented: but these old people now are at the expense must be met by the local community or the State,
the end of 4 or 5 years of depression. Their means have as well as that which must be met by the National Govern-
been exhausted to the last cent. They have nothing between ment, we shall have almost as many different standards as
them and the poorhouse, the old county farm. As we enter there are States and localities; and we shall have this situa­
upon this type of legislation and propose to do something tion arising:
for their benefit, ought we not to do something more than The authorities in some States will feel that It is difficult,
Provide an amount which is wholly inadequate to take care in fact, almost impossible, to make any immediate provision
of them? for contribution, with the result that the Federal Govern-
Mr. HARRISON. I will say to the Senator that, of course, ment will carry the whole load that may be borne; and, as
I have a big heart myef has been suggested by the Senator from Mississippi [Mr.
Mr. BORAH. I am perfectly willing to leave the provi- HARRISON],* the pressure on Congress will become irresistible
sion so that the States must put up something, but I wish to make adequate provision by the use of Federal funds alone.
to have an assurance in the bill, if we can get it, that a If we do not define in the law within limitation what the
reasonable iuxn shall be provided in some way. When I say States shall do, some of them will do nothing, and discrimi­
".a reasonable sum " I do not consider $30 a month a nations will result. A contest may arise as to which State
reasonable sum, but under the circumstances I am willing to may be able to obtain the greatest benefit for Its citizens
accept it. without assuming corresponding responsibilities.
Mr. FLETCHER. Mr. President, may I ask the Senator The Senator from Idaho has said that he realizes it Is
from Mississippi if it would be possible to provide that the absolutely necessary to require the States to contribute
Federal Government shall contribute its $15 a month, leav- something to this fund. What requirement would the Sena­
ing the State to contribute whatever it may up to $15 more? tor impose? This bill proceeds on the basis of other legis-
In other words, is it necessary to provide that the Federal lation which has been enacted, on the 50-50 basis. If we
Government will pay nothing unless the State contributes depart from the 50-50 basis, what basis shall we establish
a like amount? or accept; and will there be varying standards of Federal
Mr. HARRISON. The Senator from Florida is a wise contribution set up to meet the differences in conditions that
Senator and a very practical one, and he knows that if we may reflect themselves from the various States?
should write such a provision into the bill the States would I know there are some States which will find great diff­
not contribute, and the Federal Government would be hold- culty in meeting the requirements that are contemplated by
Ing the bag. this bill: but, on the other hand, if we say they must do
As practical men, we know there Is not any doubt that something, we are immediately confronted with the question,,
there is going to be a tremendous pressure in the future "1Then what must they do? " And who will define or make
upon any gentleman who runs for public office, either in the clear the requirements that must be met by the States in
lower House or in the Senate, to ask for an increase of the order that their citizens may have the benefits of this
old-age pension; and we are all going to be subjected to that mleasu~re?
pressure. It is a reality that In this day and time groups If the Senator from Idaho were amending the bill, what
become powerful and very often influence the judgment of change would he make? I ask for information because this
candidates for political office. This is not a very logical subject has given me great cause for study.
argument, but it is a practical one. If we leave it entirely Mr. BORAH. Exactly, Mr. President, I understand per-
to the Congress to provide all the fund, and do not require fectly the difficulty of framing an amendment so as to leave
the States to contribute their part of It, there will ever be the obligation upon the State. while at the same time pro-.
pressure upon those seeking the Federal office. There should viding a suffcient amount on which these old people caIL
be some check against too great expenditures, and the live.
cooperative plan here proposed will furnish it. The Senator I have made some effort today to draw an amendment, and
appreciates that the State is not limited in the amount to I have done so, but it is not exactly satisfactory, although it
be appropriated within the State for old-age pensions. They represents the idea. If the bill is to go over until tomorrow
are permitted as each State may decide to go beyond the I shall offer the amendment tomorrow. The amendment
$30 a month. contemplates matching the States up to $15. and then after
There are so many things to consider in connection with that the Federal Government making an appropriation which
a great forward movement like this that we must hold our- would fix the sumn at a specified amount, say $30. The
selves back a little bit, and get the very best and most con- State, therefore, would have to put up something. It might
structive measure that we can. put up but $6, and if it put up but $6 the Federal Govern-
I think this measure is most constructive. I think It is ment would match the $6 and Put up enough more to make
going forward quicker and better than we anticipated, and up the $30. That is as near as I have been able to arrive
I hope we can pass this bill without having it complicated at a practical solution of the matter.
by proposals for eliminating State contributions. To do so Mr. KING. Mr. President, will the Senator yield?
may jeopardize this whole bill. That would be a travesty. Mr. BORAH. I yield.
Mr. BORAH. Mr. President, as I said a moment ago, I Mr. KING. This is not quite pertinent, perhaps, to the
do not desire to excuse the States. wholly from this contri- observations being submitted by the Senator, but I am sure
bution. I think they ought to be required to put up some he has in mind the fact that the Federal Government is
amount. But I am sure In some instances the amount will confronted with the necessity of expenditures which it has
be very small. Now I do not want to see these old people great difficulty In meeting. The Finance Committee will
end their lives In dire want simply because the State and meet within a few days to Increase the burden of taxes made
the Government are unable to agree as to their respective necessary by the enormous deficit which we are creating.
portions. The National Government. by this bill, Is assum- There are some States in the Union which pay a, large
Ing a responsibility. That matter Is not open for debate. part of the Fiederal taxes. In addition, they are the populous
Having assumed the responsibility we should be Just to the States, and the people of those States will have to pay enor­
aged people who have, in many Instances, contributed a life mous taxes in order to carry the burdens which winl rest
of service to the State and Natlon upon them under the pending bill.
9442 CONGRESSIONAL RECORD-SENATE JUNE 17.
If the Federal Government is to assume a larger burden. under sluch plan: except that if any such empioyee- withdmaws
it simply means that we must go to those few States fIor fro thpa before he attiain the age of 55, or it the board
withdraws Its approval of the plan. the service performed while
more money. the employee Wms under such plan as approve shall be cdnstrued
Mr. BORAH. Will the Senator pardon me righit there? to be employment as defined In this subsection.
Mr. KING. Certainly. On page 43. line I11, after I Sec. 702.", to insert ft(a)¶
Mr. BORAH. While there are large States paying great On page 43, between lines 17 and 18, to add the following
sums of money, they have the wealth; and It we are to levy new paragraphs:
taxes in accordance with ability to pay, they should pay. (bTeborshlrcieapiatnsrmepoywo
In
tatIaditon osere
o tht i th ditriutin ~ desIre to operate private annuity plans with a view Lo providing
funds which are going out from the Federal Treasury, these benefits in lieu of the benefits otherwise provided for In title U
large States get their full share in Proportion to their Of this act, and the board shall approve any such plan and issue
population, & oertificate of such approval It It finds that such plan meets the
following requirements:
Mr. KING. That Is true; but consider the situation of (1) The plan shall be available, without limitation as to age,
the State of illinois, though I do not wish to particularize to any employee who elects to come under such plan.
any State. The Senator remembers that 2 or 3 years age, (2) The benefits payable at retirement and the conditions as to
notwithstanding there is considerable wealth inIlni retirement shall not be less favorable, based upon accepted
actuarial principles, than those provided for under section 202.
they found difficulty, indeed, they found It was Impossible, (3) The contributions of the employee and the employer shall
It was contended, for them to pay their school teachers and be deposited with a life-insurance company, an annuity organi­
to carry on the schools, and they had to come to the Federal zatlon or a trustee, approved
(4) Term~nation by the board.
of employment shall constitute withdrawal
Government and ask for aid in order to meet some of the frm the plan.
burdens resting upon them. (5) 'Upon the death of an employee his estate ahafl receive an
I do not want any State or any individual or any corpo- amount not less than the amount it would have received ILthe
ration to escape legitimate taxation, but the burdens now employee had been entitled to receive benefits under title U of
resting upon all of the States and upon the Federal Govern- (c) The board shaHl have the right to cail for such reports
mnent are very, very great, and we ought to bear that in mind from the employer and to make such Inspections of his records
when we are seeking to increase the burdens of the Federal as will satisfy It that the requirements of subsection (b) are
Goverment.being met. and to make such regulations as will facilitate the
Mr. BORAH. I appreciate that. I think the question of requirements. t ihsc
the burden of taxes is one of the great problems which may (d) The board shall withdraw Its approval of any such plan
be holding back recovery. I understand that pefety Ifcl.any uponaction taken of
the request fails orto ifmeet
the employer,
thereunder it finds
the that the plan at
requirements of
But we are peculiar in the fact that we discuss the ques- subsection (b) ~
tion of the tax burden only on particular occasions. O ae5.atrln .t d h olwn e aa
I shall not offer the amendment at this time, but I wish O ae5.atrln .t d h olwn e aa
to say to the Senator from Mississippi that I have not graph:
changed my view that we ought to take care of this situa- (7) service performed by an em~ployee before he attains the age
o beabl
tion an I hpe to resnt a amndmetf 65 in the employ of an employer who haa In operation a plan
tion ban abe t prsen an menmen totheproviding annuities to employees which Is certified by the board
I opeto
Senator later which he may accept. as having been approved by It under section 702. If the employee
Mr. FLETCHER. Mr. President, may I ask the Senator if has elected to come under such plan, and if the Commissioner of
he clings to the view that Flederal aid should be condl- Inlternal Revenueemployee determinles that the aggregate annual contrl­
tione on tateaidbutions of the and the employer under such plan as
tione on tateaidapproved are not less than the taxes which would othierwtse he
Mr. BORAH. I cling to the view that there should be a payable under sections 801 and 804. and that the employer pays
matching up to a certain point where the State is unable an amount at least equal to 50 percent of such taxes: Provid4d.
to mater.That
tke crecre f f thth if any such employee withdraws from the plan before be
the age of 65, or if the board withdraws Its approval at
to tkemater.attains
Mr. FLETCHER. I was wondering whether it would be the plan. there shall be paid by the employer to the Treasurer of
possible to do away with that condition, let the Flederal (3ev- the United States. in such manner as the Secretary of the Tress­
ermient contribute what Is thought wise, say $15, and let uryterwise shall prescribe, an amount equal to the taxes which
have been payable by the employer and the employee
would
the States match the payment if it is possible to do so. Of on acunt of such service, together with Interest on such amount
course, the beneficiary would get the $15 even if the State at 3 percent per annum compounded annually.
did not contribute. Mr. RUSSELL. Mr. President. I send to the desk two
Mr. CLARK. Mr. President, I have veveral amendments, amendments which I ask to have printed and to lie on the
which really constitute one amnendment, which I desire to table.
offer, but on which I do nbt desire unnecessarily to detain The PRESIDING OFFICER. The amendments will be
the Senate. The amendments are Important, and a number printed and lie on the table.
of Senators have indicated a desire to discuss them, and Mr. ROBINSON. Mr. President, I understand that only
since it would be impossible to act on them before the usual two or thiree amendments have been suggested which re­
time of adjournment tonight, and inasmuch as several other main undisposed of, and that those amendments are not
amendments have gone over until tomorrow, I ask unant- to be acted on today. Unless there is some objection I
mous consent that I may be permitted to offer the amend- shall move an executive session.
ments and have them pending, and that they may go over Mr. BORAH. Mr. President, although I may make some
until tomorrow, changes in my amendment, I think I ought to hive it
Mr. ROBINSON. Have the amendments been printed? printed so that senators may have an opportunity tor con­
Mr. CLARK. They have been printed, and have been on sider It.
the desk for several days. The PRESIDING0 OFFICER. The Senator from Idaho
The PRESIDING OFFICER (Mr. OWARoNZY in the offers in amendment, which 'Wil be printed and lie on
chair). The Senator from Missouri asks unanimous con- the taEble.
sent that he may have leave to present certain amendments,
-and have them go over until tomorrow. Is there objection?
The chair hears none.
Mr. CLARK- I offer the amendments.
The PRESIDING OFFICER. The clerk will state the
amendments?
The CumF CL~mi~ It Is proposed on page 15 after line 25,
to Insert the following:
(7) Service performed In the employ of an employer who has
1n operation a Plan providing annuities to employee which Is
certified by the Board as having been approved by It under section
702, If the employee perormlng such service has elected to come
9510 CONGRESSIONAL RECORD-SENATE JUNE 18

SOCIAL SECURITY
The Senate resumned consideration of the bill (H. R. 7260)
to provide for the general welfare by establishing a system
of Federal old-age benefits, and by enabling the several
States to make more adequate provision for aged persons,
dependent and crippled children, maternal and child wel­
fare, public health, and the administration of their unem­
ployment-compensation laws; to establish a Social Security
Board; to raise revenue; and for other purposes.
The VICE PRESIDENT. The Chair understands that the
Senator from Missouri last evening, as the RECORD shows,
asked permission to offer certain amendments to be con­
sidered as one amendment and to have them pending. The
Chair considers those amendments to be pending, unless the
Senator from Mississippi [Mr. HARRISON] calls up a commit­
tee amendment which was passed over, as under the
unanimous-consent agreement committee amendments were
first to 1'e considered.
Mr. HARRISON. It Is perfectly agreeable that the
amendments of the Senator from Missouri be considered at
this time.
Mr. CLARK obtained the floor.
IMr. BORAH. Mr. President-
The VICE PRESIDENT. Does the Senator from Missouri
,yield to the Senator from Idaho?
iMr. CLARK. I yield.
Mr. BORAH. I simply desired to know what was Pend­
ing; that is all.
The VICE PRESIDENT. The pending question Is on the
Amendments offered by the Senator from Missouri at the
conclusion of the session last evening.
Mir. CLARK. Mr. President, I ask that the amendments
be stated.
The VICE PRESIDENT. The amendments will be stated.
The cmEr Clnmx on page 15, after line 25, it Is proposed
to add the following new Paragraph:
(7) Service performed In the employ of an employer who has In
operation a plan providing annuities to employees which Is Certified
by the board as having been approved by It under section 702,
if the employee performing such service has elected to come under
such plan; except that If any such employee withdraws from the
plan before he attains the age of 65. or if the board withdraws Its
approval of the plan. the service performed While the employee was
unmder such plan as approved shall be construed.to be employment
a's denined In this subsection.
1935 CONGRESSIONAL RECORD-SENATE 9511
On Page 43, line 11. after "1Sec. 702.", Insert "(a).~" Mr. ROBINSON. In connection with the statement th.
on Page 43, lines 17 and 18. add the following new Senator Is now making, on page 3 of the amendment, I find
Paragraphs: the following language:
(b) The board shall receive applications from employers who And if the Commissioner of Internal Revenue determines that
desire to operate private annuity plans with a view to providing the aggregate annual contributions of the employee and the
benefits in lieu of the benefits otherwise provided for In title H of employer under such plan as approved are not less than the
this act, and the board shall approve any such plan and issue a taxes which would otherwise be payable under sections 801 and
certificate of such approval If it finds that such plan meets the 804, and that the employer pays an amount at least equal to
following requirements: 50 percent of such taxes.
(1) The plan shall be available, without limitation as to age, to ilteSntrepante enn ftels lue
any employee who elects to come under such plan. Wl h eao xli h enn ftels lue
(2) The benefits payable at retirement and the conditions as to "that the employer pays an amount at least equal to 50
retirement shall not be less favorable, based upon accepted actu- percent of such taxes "., in view of the requirement that
arial principles, than those provided for under section 202.
(3) The contributions of the employee and the employer shall the annual contribution under such Plan, when approved.
be deposited with a life-insurance company, an annuity organiza- Shall be " not less than the taxes which would otherwise be
tion, or a trustee approved by the board.pabl 1
(4) Termination of employment shall constitute withdrawal pybe"
from the plan. Mr. CLARK. Some of the plans require diversified con­
(5) Upon the death of an employee, his estate shall receive an tributions by employer and employee. It is provided fur­
amount not less than the amount It would have received if the ther that the amount of the contribution shall be not less
employee had been entitled to receive benefits under title II of ta h ae ob ada rvddi h edn il
this act. ta h ae ob ada rvddi h edn il
(c) The board shall have the right to call for such reports from and further, there is a requirement for the purpose of in­
the employer and to make such Inspections of his records as will suring that no employer can gain anything financially by
satisfy it that the requirements of subsection (b) are being met, remaining under a private pension plan or going under a
and to make such regulations as wifl facilitate the operation of
such private annuity plans in conformity with such requirements. private pension plan. To that end a provision is inserted
(d) The board shall withdraw Its approval of any such plan that he shall pay not less than 50 percent of the Joint con­
upon the request of the employer, or if It finds that the plan or tribution. No employer shall, under the exemption granted
any action taken thereunder falls to meet the requirements of b h mnmnb emte opyit h rvt
subsection (b). b h mnmnb emte opyit h rvt
On page 52. after line 7. add the following new paragraph: pension fund, as a minimum, less than the amount of the
taxes he would have to pay under the bill. That is the
(7) Service performed by an employee before he attains the ageC whole purpose of the amendment.
Of 65 in the employ of an employer who has in operation a plan
providing annuities to employees which Is certified by the board as Provision is made as fully and adequately, in my Judg­
having been approved by It under section 702, it the employee has ment, as it is possible to make provision to cover the pur­
elected to come under such plan, and if the Commissioner of Inter­
nal Revenue determines that the aggregate annual contributions Of poses intended; and the amendment has been recast since
the employee and the employer under such plan as approved are it was offered in the committee for the purpose of meeting'
not less than the taxes which would otherwise be payable under objections made in the committee. It is provided onl
sections 801 and 804. and that the employer pays an amount at page 2:
least equal to 50 percent of such taxes: Provided, That if any such
employee withdraws from the plan before he attains the age of 65. The board shall receive appllcations-­
or if the board withdraws Its approval of the plan, there shall be That is, the board set up under the bill, and no one may
paid by the employer to the Treasurer of the United States, In such
manner as the Secretary of the Treasury, shall prescribe, an amount have exemption unless his plan meets the requirements of
equal to the taxes which would otherwise have been payable by the the amendment and is approved by the board itself.
employer and the employee on account of such service, together
with interest on such amount at 3 percent per annum compounded (b) The board shall receive applications from employers who
annually. desire to operate private annuity plans with a view to providing
benefits in lieu of the benefits otherwise provided for In title 1I
Mr. CLARK. Mr. President, I ask Inanimnous consent of this act, and the board shall approve any such plan and Issue
that my amendments may be considered as one amendment. a certificate of such approval If it finds that such plan meets
The VICE PRESIDENT. Is there objection? The Chair2 (1) The plan shall be available, without limitation as to agM
hears none, and It is so ordered. to any employee who elects to come under such plan.
Mr. CLARK. Mr. President, while it has been necessary' Of course, the exemption does not provide for forcing
to propose amendments to various sections in the bill, the under the operation of the plan any employee who would
amendments essentially comprise but one amendment. TheprfrtreanudrheGvnm tpl.
purpose may be very briefly stated. The purpose of the prefTet reemains undaber ath roetrement pan. h odtosa
amendment is to permit companies which have or may to(retirembenefits payable atsretirementeandathe conditionstas
establish private pension plans, which are at least equally actuarial principles, than those provided for under section 202.
favorable or more favorable to the employee than the plan I te odi ean o h orstu ne h
set up under the provisions of the bill as a Government bintote woinstrds thremainsmfor thensboarne uplnunderther
plan, to be exempted from the provisions of the bill and to bineI to chadmnster the Goveranafim vreuement;pninpat adetr
continue the operation of the private plan provided it mn nec aeadmk nafraierqieet n
ofthe menmen andis pprvidthe board shall find, before they grant the exemption,
meet th reuireent that
meet thebordequirmet ofthe aml tendenf ndi.apovdthe benefits to the employee under the private pension plan
Mr. CONNALLY. Mr. President- are not less favorable, based upon accepted actuarial princi-
The VICE PRESIDENT. Does the Senator from Missouri ples, than those provided under the Government pension
yield to the Senator from Texas? plan.
Mr. CLARK. IMr. yield. S. The contributions of the employee and the employer shall be
te Seato's mendentex-deposited with a life-insurance company, an annuity organiza..
ONNLLY.Woud
te Seato's mendentex-tion, or a trustee approved by the boaZX1.
Mr. ONNLLY.Woud
empt such corporations from paying the tax?
Mr. CLARK. Yes; to the extent of the requirements. of This puts in the hands of the board itself the security of
the amendment. these funds and Insures that no possible failure on the part
Mr. CONNALLY. If under the Senator's plan a company of the employer may jeopardize the interests which the em­
shculd qualify under his amendment, there would be no pay ployees acquire. It puts It in the hands of the board to
roll tax on the company or the employees, I understand. make requirement for that security.
Mr. CLARK. Insofar as this title is regarded, that would 4. Termination of employment shall constitute withdrawal from
be true; but the amendment requires that the employer th P- 1
shall pay Into the private pension fund, under conditions Mr. O'MAHONEY. Mr. Fresiftnt-
approved by the board, not less than the amount of the taxes The VICE PRESIDENT. Does the Senator from Missouri
which. would otherwise be paid under the provisions of Yield to the Senator from Wyoming?
the bill. Mr. CLARK. I yield.
Mr. ROBINSON. Wr. President. will the Senator yield? Mr. O'MAHONEY. May I ask the Senator from Missuri
Mr. CLARK. Certainly. If he does not believe that there is a possibility, at least
9512 CONGRESSIONAL RECORDL-SENATE- JUNE 18
that clause (4) would allow an employer to terminate the Mr. CLARK. It seems to me It Is. if the senator from
employment and thereby defeat the plan? New York has any suggestions, I shall be very glad to have
Mr. CLARK. I will say that, in my judgment, that is them.
completely guarded against-although I shall be very glad to Mr. WAGNER. The language of the amendment is:
accept a further amendment to make it more certain-by T1he plan shall be available. without limitation as to age, to any
later language in the amendment which provides that upon employee who elects to come under such plan.
termination of employment- That is, the employer cannot compel an employee to be­
There shall be paid by the employer to the Treasurer of the come a member of the plan.
Uinited States. In such manner as the secretary of the Treasury Mr. CLARK. That Is not intended.
may prescribe, an amount equal to the taxes which would other­
wise have been payable by the employer and the employee on Mr. WAGNER. But, at the same time, there Is nothing
account of such service, together with Interest on such amount in the amendment which will prohibit an employer from
at 3 percent per annum, compounded annually. declining to accept the employee.
Mr. O'MAHONEY. Would the Senator accept an amend- Mr. CLARK. Mr. President, if this language is not clear,
ment by which the word " voluntary " should be inserted I shall be very glad if the Senator from New York will sug­
before the word "1termination "2 gest some amendment to make it clear, because I personally
Mr. CLARK. I should be glad to accept the amendment. should be unable to frame it in any clearer language.
As a matter of fact, it seems to me that the termination The plan shall be available without limitation-
under this plan should be from any cause, either by dis- Tels luepoiisayepoe rmsutn u
charge of the employee or by the withdrawal of the em- onthe lastd cause, prohibit isan
employersfrom wshuttin cout,
ployee, provided it is made certain that at such time theontegudofaayofhsmpyeswoihtoce
employee should pay into the Government fund the amount under it.
which would have accrued by taxes, plus 3 percent corn- Mr. LONG. Mr. President-
pounded annually. That is the theory of the amendment. Mr. CLARK. I shall be glad to yield to the Senator from
I am willing to accept the amendment suggested by the Louisiana in a moment.
Senator from Wyoming. The plan shall be available, without limitation as to age, to any
Mr. BARKLEY. Mr. President, in that connection, winl employee who elects to come under such plan.
the Senator yield? I do not know how to make that any clearer. If the Sen­
Mr. CLARK. I yield to the Senator from Kentucky. ator from New York can suggest some way of clarifying it, I
Mr. BARKLEY. The mere insertion of the word " vollun- shall be glad to have him do it.
tary "1, so that it would read " voluntary termination of em- Mr. WAGNER. There is nothing in the amendment which
ployment ",unless we should put in "on the part of the requires the employer, if that election takes place, to accept
employee , might mean the voluntary termination of it by it. He may decline to do so.
the employer. Mr. CLARK. The amendment says:
Mr. CLARK. If the Senator from Wyoming will permit The plan shall be available to5any employee who elects
me, if he will examine the amendment carefully, I think he to come under such plan.
will find that the theory of the amendment is that when- At ANR 1Eet ~ys
evertheempoymnt
i temintedfromanycaue wat- Mr. CLARK. I shall be glad to accept any amendment to
ever, at that moment the employee shall have the right, as the effect that the employer must accept any employee who
already provided, to have paid into the Government fund desires to come in, because that certainly is the intention of
from the private pension fund the amount of taxes which the language. I think the language is perfectly clear, but I
would have been paid in from the beginning of his employ- shall be very glad to accept an amendment to that effect,
ment, plus 3 percent compounded annually, which is exactly which I will prepare a little later.
the basis of the Government plan. In other words, the M.LN.M.Peiet
theory is that whenever the employee from any cause goe Mr. CLARG. Iryreiedento h -eaormLusaa
off the private pension plan, he shall automatically be enti- Mr. CLONG. Iyelthi theamnmento abm outiwichn ave
tled to take his place in the Government plan with the Mrb OG sti h mndetaotwihIhv
same benefits that would have been there if he had been been getting some letters from employees of oil refineries?
under the Government plan al the time. Is this to take care of them?
Mr. O`MAHONEY. Of course, this is the first opportu- Mr. CLARK. I dare say it Is. I have had a great mn
nity many of us have had to examine the amendment, and letters from employees and a great many letters from em­
I have Just been following the Senator as he proceeded ployers. Some of the oil companies-notably the Standard
through it. I believe the amendment should be studied Oil Co. of California, the Socony-Vacuum. Co. of New York,
carefully before acting upon IL. I believe the Standard Oil Co. of New Jersey, and a great
Mr. CLARK. I shall be very glad to have any suggestions number of companies-have voluntary pension plans.
from the Senator. The amendment has been carefully gone Mr. LONG. This amendment protects them In what they
over by the legislative drafting set-vice in order to meet the alreadly have?
objections which were made in the committee. I believe it Mr. CLARK. This amendment Is for the purpose of pro­
to be comprehensive. I had the affendment printed several tecting them in their rights.
days ago, and have urged many Senators to take the trou- Mr. BARKLEY. Mr. President-
ble to examine it. and if there are any suggestions on the Mr. CLARK. I yield to the Senator from Kentucky.
part of any Senator for the purpose of making abundantly Mr. BARKLEY. Would not this amendment, If adopted,
clear the purposes of the amendment, I shall be very glad subject the whole measure to the possibility of creating a
indeed to have them brought forward, competitive situation between the Government and private
Mr. WAGNER. Mr. President, winl the Senator yield? annuity or Insurance companies, so that a lot of high-
Mr. CLARK. I yield to the Senator from New York. pressure salesmanship would be brought to bear on employers
Mr. WAGNER. Referring to the first requlrement, the by private companies to adopt a, private system In compe­
Senator's amendment provides: tition with the national system?
The plan shall be available, without limitation as to age, to any Mr. CLARK. Mr. President, I do not think it would: and
employee who elects to come under such palan if the high-pressure salesmanship led to employers extend­
Does the Senator interpret that to mean that any employee, ing Inore generous treatment to their employees, I do not
if he elects to Join this plan, may Join it-in other words, see that there would be any disadvantage to anybody If that
that the employer is compelled to accept as a member of the were the result.
Plan any employee who elects to become a member of it? Mr. BARKLE. let me ask the Senator another ques­
Mr. CLARK. Yes. tion. Would not the employer be permitted or induced to
Mr. WAGNER. It seems to me that the language is not discriminate as between younger employees and older em­
subject to the Interpretation given It by the Senator. ployees, so that the older ones might be shunted off on the
 1935 CONGRESSIONAL RECORD-SENATE 9513
Government, while the younger ones were taken care of by because in the wear and tear of industry it is very desirable
the private plan? that women should be retired earlier than men.
Mr. CLARK. That objection was raised before the corn- Mr. LEWIS. Mr. President-
mnittee, and the amendment was redrawn and the provision Mr. CLARK. I yield to the Senator from Illinois.
added that the payment of the employer shall not be less Aft. LEWIS. I wish to say to the Senator from Missouri
than the amount of tax for the specific purpose of meeting that the large institutions in my home city called the " pack­
that objection; so there is no possible way, under the amend- ing companies " inform me that they have long had in exist­
ment as now drawn, by which any employer can profit to ence their own private systems; and. if I may be forgiven a
the extent of a single penny, in any manner, by going on a personal touch, while for a little while acting mayor of that
Private pension plan rather than on the Government pen- city-previously the corporation counsel-we sought to In­
sion plan. augurate a joint city concern with that of the packing in­
Of course, the suggestion originally arose in connection terests, which did not succeed. The packing companies
with such companies as the Ford Motor Co. and tL . Good- feel, however, that their own plan has been a very great
Year company. The suggestion was made that when they success; and there is presented. I may say to the Senator, a
had limitations as to the ages of their employees, or refused joint paper on the subject signed by a certain number of
to emiploy men over 35 or 40 years old, to allow them to have their employees. What proportion the number bears to the
private pension plans was to put a premium on such con- whole of their employees I do not know. I ask the Senator,
duct. As a matter of fact, Mr. President, of course, every- is there anything in his amendment or in the bill which
body knows that nearly all the companies which have age would prevent these concerns from dropping their private
limits as to their employees are companies, like the Ford arrangement and coming into the Federal bill at a later time
Motor Co., which manufacture on a line which requires each if they chose to do so?
employee to perform a certain operation at a certain time, Mr. CLARK. There is not. There Is specifically provided
and a slowing up of one employee slows up the whole opera- in the amendment, I will say to the Senator from Illinois,
tion. In other words, it is like a ball player's legs giving the completest freedom of action. In other words, an em­
out on him and slowing up the whole baseball team. The ployee would be permitted to withdraw from the system at
purpose of that requirement in such companies as that has any time he chose and to take into the Federal system with
nothing to do with any pension plan, but is simply be- him the amount which would have been there if he had been
cause the younger employees are more efficient in the line under the Federal system all the time. The board not only
operation, has the right but it is the duty of the board, at any time all
For the purpose of meeting such an objection as that, of the conditions provided for in the amendment are not
however, a provision was inserted in this amendment as complied with, to withdraw the exemption and force the
redrawn, and as now before the Senate, which provides that employer and the employee into the Government pension
the employer must in every case pay into the private pen- system.
sion fund, and to the reserve set up under the private pen- Under the amendment the employer has the right. if he
sion fund, an amount not less than the amount of the tax, finds he cannot go on with the private pension plan. to
so that it is impossible for him to profit in any way by withdraw his application for exemption, at which time the
going unden a private pension system, whole concern passes under the Government plan, with every
Furthermore, if, as suggested before the committee, there right secured to the employees that would have been theirs
is any advantage to the employer in being able to insure if they had been under the plan all the time.
more cheaply because of the average younger age of his em- Mr. LEWIS. Then I understand the able Senator to say
ployees by reason of this age-limit requirement, under the that if the amendment. should be agreed to and the private
amendment the only person who could benefit by such concerns continue as they are, should anything arise as
cheaper rate would be the employee, between the employers and the employees, the availability
In other words, if the employer under the provisions of under the general law would be open to them completely,
the Government pension scheme should be required to pay without obstructions?
in $300 a year, he would still be required to pay in a minimum Mr. CLARK. That is entirely correct.
of $300 a year under the private pension scheme, because that Mr. BARKLEY. Mr. President, will the Senator yield?
is specifically set forth in the amendment. The only advan- Mr. CLARK. I yield.
tage which could come to anybody would be, in such a situa- Mr. BARKLEY. Does the Senator think it Is in the in­
tion, if there were lower rates of insurance on account of the terest of efficient administration to have some of the em­
younger age of the employees, that the employer in paying ployees of any employer under a private annuity system and
the $300 into the private pension fund would be able to buy other employees of the same employer under the Govern­
a larger annuity for his employee than he otherwise would ment system?
under the Government pension scheme. That would be the Mr. CLARK. That might be a matter of inconvenience
only possible advantage. to the employer, but if in truth and in fact the private an­
Mr. President, it was said before the committee, and was nuity plan were more beneficial to the employee, I think
said again in the Senate the other day by the distinguished there would be very little danger that the employees would
chairman of the committee, that there are in fact no pri- not desire to be under the private plan. On the other hand,
vate pension plans which are more favorable to the em- if it were not more beneficial, then there would be very
ployee than the Government pension plan provided for in little doubt that all the employees would desire to be under
the bill. I do not desire to go into great detail on that mat- the Government plan.
ter. I simply desire to point out that while I freely admit Mr. BARKLEY. In any casc, would not the Government
that there are private pension plans now in existence which be under an obligation to carry on inspections to determine
are not as favorable to the employee as the Government whether or not the plan was as favorable as that of the
pension plan, which class of private pension plans would not Government?
come within the purview of the exemption set up in the Mr. CLARK. There is so much inspection and so much
amendment, there are a great number of private pension administrative overhead machinery provided for in the bill
plans which are vastly more favorable to the employee in that it is impossible for mie to believe that a few more
many particulars. For instance, some private pension plans Government employees in the administrative section would
now in existence-many of them, in fact-provide for an make much difference.
earlier retirement age for women than for men. The bill Mr. BARKL.EY. One more question, although I[ do not
makes no distinction between the retirement age for men like to take the Senator's time.
and for women under the Government pension plan; and The Senator will recall that we attempted to eliminate
yet it is almost universally agreed among doctors and sociol- child labor, first, by prohibition against the shipment in
ogists that in any pension scheme a distinction should be interstate commerce of products of child labor, which was
made between the retirement age for men and for women, declared unconstitutional. Then we tried to reach it by tax­
 9514 CONGRESSIONAL RECORD"-SENATE JuTNE 18
ation, and the Supreme Court held tha~t unconstitutional in The PRESIDENT pro tempore. is there objection? The
part on the ground that it was a penalty assessed against Chair hears none, and the clerk will read.
those who did indulge in child labor. Under the pending The legislative clerk read as follows:
amendment, as I understand It, those who adopt the private RSAsoNs IN SuppoSIT Op AN Aw~aNDMcNT pu ERrrTNo pRSvATS AN.
system are exempt from the tax that is levied generally for Numr PLANS UNDER SOCzsL SZcUUrTY BuzL (H. R. 7200)
the support of the Government system. Does the Senator ADVANAGMS TO ZWLOYZZ
think that lays the bill open to the constitutional objection, 1. More liberal annuities.
on the ground that it penalizes those who do not have a 2. Credit for past service.
private insurance plan as compared with those who have, 3. ProtectIon for employees now on pension.
and that that might endanger the bill on the question of 4. Employees age 60 and over are covered.
consitutonalty?5. Annuities in true proportion to earnings and service.
consitutonalty?6. Joint annuitles, so as to protect wives Malo.
Mr. CLARK. The constitutionality of the proposed act 7. Earlier retirements for women.
is already so doubtful that it would seem to me to be a B.Earlier retirements for disability or other reasons.
work of supererogation to bring up the question of consti- 9.Annuities, not cash, for withdrawing employees.
tutionality in regard to the pending amendment. Let me ADVANTrAGES TO rEPL0YESS
say to the Senator, to answer more seriously, that if the 10. They need and want the more adequate annuities provided
question of constitutionality is involved in regard to the by private plans, with recognition of past service.
matter he has suggested, it is already in the bill under the any11. heavier
They know that It is not feasible. to Impose on all employers
burden than the bill contemplates, but more Uiberal
amendment in title IX offered by the Senator from Wiscon- plans are desired by many who can afford to carry them.
sin [Mr. LA FOLLETTE], and adopted by the Senate, making 12. Private plans take adequate care of older employees. their
certain exemptions in the case of employees' pensions. In most pressing problem.
other words, the distinction, while not Identical, is in prin- ADVANTAGOS to THE GOVERNIMmT
ciple the same. 13. RelIef from deficits dueto unearned annuities.
Mr. BARKLEY. The amendment to which the Senator 14. Reserves of private annuity plans flow Into business chana-
refes dffeent
dalswitha
ubjct.nels.
refesdffeent
dalswitha
ubjct.15. Private plans wiul absorb part of the burden on other por..
Mr. CLARK. Of course it deals with a different subject; tions of the social-security program.
in other words, It deals with an exemption for the purpose 16. PrIvate plans will relieve the Social Security Board of a
of allowing the State of Wisconsin to continue its own State vast amount of detail.
system without interference. 5hYFiTY OF "WIATE FLANlS
Mr. LONG. Mr. President, will the Senator yield? 17. Past record of properly financed plans, and the future out.
Mr. CLARK. I yield. look, show only security for properly safeguarded private plans.
Mr. LONG. I wish to say that, as the Senator from Ken- THZ " SUPPIZMEIITART PLAN " 3IEA
tucky very appropriately pointed out, on the basis of the 18. Theoretically appealing, but not practically workable and
complete analysis he has made, the bill is unconstitutional, certainly not productive of liberal guaranteed annuities for em-
The private pension system is the thing which the Govern- Ployees.
ment could afford to encourage. Mr. GEORGE. Mr. President, I desire to support the
Mr. BORAH. Mr. President, will the Senator yield to me? amendment offered by the Senator from Missouri [Mr.
Mr. CLARK. I yield. CLARK] not only upon the grounds stated in the presenta­
Aft. BORAH. The Senator made reference to exemptions tion made and in the document Just read from the desk.
already incorporated in the bill. but also because there Is very grave doubt of the constitu­
Mr. CLARK. That is in a different title, I will say to the tionality of the bill as it stands. I do not believe that any
Senator from Idaho. That is under unemployment insur- lawyer of experience would assert that the bill is free from
ance, in title IX. constitutional question. I do not wish to expand the con­
Mr. BORAH. The bill does not cover all employees in all stitutional argument, because the Senate is not in receptive
lines of industry or avocation, does it? mood, but the bill undertakes to impose a tax upon speciflo
Mr. -CILARK. It does not. I take it for granted that it is employers. The beneficiaries of the tax are a special class,
an undoubted constitutional principle that the matter of it is disclosed in the hearings, and it is disclosed in the sug­
classification is a matter for the legislature rather than the gestion or the Secretary of the Treasury at one time for
courts. The bill specifically exempts large classes from its an alteration in the tax rate itself, showing that the only
operation. For instance, it exempts agricultural classes, and purpose of the bill is to set up a system of old-age annuity
exempts Government employees, one of the largest classes of and unemployment insurance by the use of the taxing
employees in the country, I assume for the reason that the power, and by the creation of the annuity system and the
Congress recognizes, in considering this bill, that the Gov- old-age employment insurance system.
ermient already has in effect, in its capacity as employer, a I direct the attention of the Senate to the fact that the
pension system more beneficial to the employees than the bill is not a grant in aid to the States. That Is true as to
one set up in the bill. for the general rum of industry. As title II, portions of title III and title VIII of the bill, the tax­
the Senator has sugp'ested, there are large classes of the ing title, and part of title IX which also covers taxing pro­
population who are aiready excluded or exempted from the visions. It is not a grant in aid of the States, but It does
operation of the proposed law, undertake, by the use of the power to appropriate money out
Mr. BORAH. May not the Congress make any classifica- of the General Treasury, to apply the money so appropriated
tion it desires, so long as it is not purely arbitrary or ca- to the establishment of the old-age-annuity and unemploy­
Pricious? If there is any foundation for a difference of ment-insurance systems, under which the beneficiaries are
classification, the Congress can make it. the identical employees of the taxed employers, and under
Mr. CLARK. It seems to me there cannot be any ques- which the taxing provisions of this bill undoubtedly are
tion of that as a legal proposition, tied in with the titles establishing the old-age annuity and
The PRESIDENT pro tempore. The Senator's time on the the unemployment-insurance provision.
amendment has expired. I also direct attention to the salient and important fact
Mr. CLARK. I reserve the balance of my time, then. that under title II of this bill and a part of title II of the
Mr. MCNARY. Mr. President, a few days ago I received bill rights enforceable at law are granted to private citi­
a very interesting letter from Mr. H. W. Forster, vice presi- zens, irrespective of the character of their employment,
dent of an insurance company of Philadelphia, setting forth irrespective of the character of the industry in which em­
some of the advantages embodied in the proposal made by ployed, in every State In the Union; and that, In my iudg­
the Senator from Missouri [Mr. CLARK]. Having that in men, clearly shows that an effort is here made to establish
mind, I ask unanimous conzent to have the clerk read the Ia system which does not le within the powers granted to the
reasons Set forth in the letter in support of the amendment. ICongress, but which have been definitely reserved to the
It Is very brief, comprising but one page, 'States under the reserved rights and powers of the States.
 1935 CONGRESSIONAL RECORD-SENATE 9515
Even the preamble of the bill shows unmistakably that Ity has the Congress established it? That LSthe simple, the
the taxing power is invoked for the purpose of setting up necessary, the logical question.
old-age annuity and unemployment insurance. I know that the tax may be imposed if within the taxing
Mr. President. I know that the courts will go a long way power of the Congress, although other objectives may be
to uPh Ad the power of Congress to appropriate; and I am effected or accomplished through the imposition of the tax;
not going to controvert that. I also know that the courts but I also know that it Is a sound principle of law that a tax
will go a long way to sustain legislation of this character, cannot be imposed for a private purpose. It must be public.
and -I think they should. But if the court looks through I also know that as a matter of sound legislation the Con­
mere form to the subistance of this bill, I assert again that gress ought not to set up a scheme under which enforceable
the question of the validity of the bill Lk one which no rights are given to individuals unless the Congress can relate
responsible lawyer would undertake to say is not in serious its legislation to some grant of power.
question. Hence, why strike down, with the probably un- Mr. WAGNER. Mr. President, will the Senator yield?
constitutional bill, the private pension systems and private Mr. GEORGE. I yield.
benefit systems granting benefits to the employees of em- Mr. WAGNER. I absolutely agree, of course, with the
Ployers of thins country, some 450 in number, embracing a Senator from Georgia that we certainly cannot levy a tax for
large part of our population-why strike those down when a purely private purpose; but does the Senator contend that
a bill is proposed whinch probably will not pass the muster the payment of an old-age pension Is a private purpose as
of the cour t~s? distinguished from a public purpose?
Let me say that It was argued in committee that the Mr. GEORGE. I contend that we do not levy this tax
private pension systems might still be maintained. I sub- nor do we use the proceeds of the appropriation made out
mit as a matter of plain common sense that the private of the General Treasury for the purpose of setting up an
systems will not, in fact, be maintained if the employers are annuity for all old people in the United States. We have
subjected to a tax which they must In any event pay for selected classes. I contend also that we have selected the
the purpose of setting up an exactly similar system, or a classes whinch are intimately and inescapably tied in with
system that has for its objectives the same general purpose. the employers who are taxed under title VIII anid title IX
Mr. LEWIS. Mr. President, will the Senator yield? of this bill, and therefore the scheme is palpable and clear
Mr. GEORGE. I yield. to my mind, and that we are imposing the tax for identi­
Mr. LEWIS. Conscious as I am that the able Senator cally the same purpose condemned by the Supreme Court
from Georgia occupied a high place on the bench, and, there- in the railway-retirement decision, aside from the first
fore, that the subject he is now discussing is not one to be suggestion that there were inseparable clauses which
called primary with him, I should like hins Judgment on one offended varied provisions of the Constitution; that we
matter. How far does he feel that the decision of the Su- could not by compulsion, make the industry set up an old-
preme Court of the United States on the tax feature to age-pension system.
which he alludes, in the cause which came up from North Mr. BLACK. Mr. President, will the Senator yield?
Carolina where the question of tax was assumed to be the Mr. GEORGE. I yield.
motive in the case of protecting child labor-how far does Mr. BLACK. The Senator several times has referred to
he feel that that opinion supports the viewpoint he has the bill, when, as I gather his argument, he intends to
uttered here today respecting the doubtful features of the limit his constitutional objection to title IL
tax provisions of thins bill? Mr. GEORGE. Exactly.
Mr. GEORGE. In reply to the distinguished Senator Mrt. BLACK. As I understand the Senator, he concedes
from Illinois, I1 would not say that the child-labor taxing fully and completely the right of a State under the Con­
decision is strictly applicable to this case, except in point of stitution to establish an old-age-pension system.
principle. In that case the act itself carried upon its face Mr. GEORGE. Beyond all doubt.
the disclosure of the real purpose of imposing the tax; and Mr. BLACK. And, therefore, he concedes the right of
the Supreme Court, of course, said that the object was not the Federal Government to aid that State by Federal
that of raising revenue, grants in aid, under such conditions as it sees 1It.
Mr. WAGNER. Mr. President- Mr. GEORGE. I do: and I should have been most en­
The PRESIDING OFFICER (Mr. McGILL in the chair). thusiastic in my support of the bill had this particular part
Does the senator from Georgia yield to the Senator from of the bill been dealt with in that way-that is, through
New York? grants in aid to the States.
Mr. GEORGE. I yield. Mr. BLACK. As I understand further, the Senator's
Mr. WAGNER. Will the Senator from Georgia permit objection on the constitutional ground is that instead of
me to read to him some language from the case of United Permitting the State-which he says does have the power
States against Doremus, Two Hundred and Forty-ninth to set up a system-to set up that system, in title II the
United States Reports, page 86. involving the Harrison Federal Government sets up an old-age-pension system;
Narcotic Act, in whinch the question was whether a bill and the Senator from Georgia is of the opinion that the
which contained a taxing feature could also accomplish Federal Government does not have that power under the
some other purpose In addition to that of merely levying Constitution?
a tax? The Court said: Mr. GEORGE. I am of that opinion, because I can find
An act may not be declared unconstitutional because its effect in the Constitution no provision which grants that power.
may be to accomplish another purpose as wenl as the raising of This is clearly, as I think, among the reserved powers of
revenue. If the legislation Is within the taxing authority of the State.
Congress, It Is sufficient to sustain it Mr. WAGNER. Mr. President, will the Senator yield?
There the act itself had other purposes in addition to Mr. GEORGE. I yield.
levying a tax. Mr. WAGNER. I do not wish to annoy the Senator with
Mr. GEORGE. The decision to which the Senator from my interruptions.
New York calls attention would not be controverted by Mr. GEORGE. No: I shall be glad to yield.
anyone, anywhere. Mr. WAGNER. I am, not quite clear as to one of the
Mr. WAGNER. I thought the Senator was contro- Senator's contentions. Does the Senator contend that, be­
verting it. cause of the decision in the Railway Pension Act, we are
Mr. GEORGE. No; I am not controverting Ut. I am try- powerless to enact a law of this character?
ing to make my, position clear, and I am saying that we are Mr. GEORGE. I contend that under that decision the
setting up in this bill a particular old-age annuity and un- Congress cannot directiy say to an Industry, "1You must
employment insurance system under which the Individual set up an old-age-pension system " or "1a retirement sys­
citizen in any State in the Union acquires an enforceable tem "1; and I contend further that when the scheme which
right; and wnen he undertakes to enforce it by what~author- has been devised Is so tied In with the taxing provision as
9516 CONGRESSIONAL RECORD--SENATE JUNE: 18
to disclose but one purpose, and that is the purpose of using everybody in the United States to pay these particular pen­
the general taxing power for the purpose of providing this sions? I do not know where the Senator got the notion that
system only for the beneficiaries who fall within the classi- I ever contended that everybody in the United States ought
fication of the employees of the taxed employers, we shall to have a pension. I never made any such contention.
have a legislative act, if the bill shall be passed, which any Mr. GEORGE. I think it would.
reasonable lawyer of experience will be bound to say Is sub- Mr. BARKLEY. Mr. President. will the Senator yield
Ject to serious question, there?
For my purposes, that is all I desire to say, because I am The PRESIDING OFFICER. Does the Sentatr from
arguing in this instance for the approval of the Clark amend- Georgia yield to the Senator from Kentucky?
ment. Mr. GEORGE. I yield.
Mr. WAGNER. I understand. Mr. BARKG.EY. If I understand the Senator correctly,
Mr. GEORGE. And I am proceeding upon the theory that he does not raise any constitutional question as to the power
Congress ought not, through this legislation, practically to of Congress to levy the tax as a tax?
strike down and prevent the expansion of private or com- Mr. GEORGE. Oh, no.
pany insurance, or annuity plans. The effect of the pro- Mr. BARKLEY. The money to go into the Treasury for
posed legislation undoubtedly will be to discourage any fur- general governmental purposes.
ther advances of the private pension systems in the United Mr. GEORGE. I want to qualify my statement. I do not
States. raise any question regarding the power of the Federal Oov­
Mr. WAGNER. Mr. President, as I recall, there was not ermient to make appropriations out of the General Treasury
anything in the decision that might even suggest that the and to levy taxes, of course.
establishment of a pension system, providing that the classi- Mr. BARKLEY. Therefore, if the proposed pension sys­
fication is fair, would not be considered a public purpose. tem is tied in with the tax, although in an attenuated way,
The decision was based on the ground that interstate comn- the Senator thinks that the tax, then, is lawful, Just as a,
merce was not affected by the retirement of old workers. pure tax would be lawful, and is within the power of
The taxing power was not involved. Congress?
Mr. GEORGE. That is very true; the taxing power was Mr. GEORGE. I think Congress may impose an excise
not involved, but we cannot, under the compulsion of a tax, tax based upon the volume of' pay rolls, if that is what the
make an industry do any more and we ought not at least to Senator means; but if it is tied in with this particular
undertake to make it do any more than we could do directly, scheme, as provided in this bill, I question the validity of
If the scheme is one that can be referred to any legitimate the tax,
power of the Congress, all well and good; but if it cannot be, Mr. BARKLEY. Where is the difference, in constitutional
and if it is one that must depend rightfully and rightly upon principle, between making a lump-sum appropriation out of
the exercise of the reserved powers of the States, then Con- the Treasury for relief purposes and making an appropria­
gress should not through the compulsion of a tax undertake tion out of the Treasury for relief purposes by setting up
to compel the adoption of the scheme, classifications under which relief shall be paid in the form
Mr. WAGNER. Then, as I understand the Senator's con- of old-age pensions? I do not quite understand the dis­
tention, it is that he doubts whether the establishment by tinction the Senator makes or how It would raise any con­
Federal Government of a Federal pension system for a class stitutional question as to the power of Congress to pay aged
of workers in this country is a public purpose. people what we call a pension.
Mr. GEORGE. I did not say that it was not a public Mr. GEORGE. Does the Senator mean to pay them as a
purpose, mere matter of gratuity?
Mr. WAGNER. I mean the Senator contends that there Mr. BARKLEY. Well, not necessarily as a matter of
is a rerious question as to whether or not it is a public gratuity; but assuming that it were a gratuity-
purpose. Mr. GEORGE. Does the Senator mean to say, If en-
Mr. GEORGE. I said that under this bill there is a semi- forcible rights are granted to pensioners generally, that,
ous question as to whether or not it is. even if the appropriation is made out of the general funds
Mr. WAGNER. Is that because of the classification? of the Treasury, no serious question might be raised?
Mr. GEORGE. Because the beneficiaries are so restricted Mr. BARKIEY. Of course, the line of demarcation Is so
and tied in with those who are taxed as to make it, in sub- blurred at points that it is always diffcult for anybody here
stance at least, a compulsory system through the use of the to be sure that what he does is constitutional.
taxing power by the Congress. Mr. GEORGE. Perhaps I may help the Senator by this
Mm. WAGNER.- In other words, as I understand the Sen- observation: I did not undertake to make a constitutional
ator's contention, he believes that it would be a safer method argument; that is not my purpose; my purpose is to point
if we should tax all the people of the United States, instead out the doubtful validity of this proposed act and to invite
of merely taxing the employers of the workers, for the pur- the Senate to permit, under the Clark amendment, the con­
pose of supporting a, pension system. tinuance of the plans now in existence if they meet the
Mr. GEORGE. Mr. President, I do not regard it as within standards which the Congress is setting up.
the power of the Federal Government to set up a pension Mr. BARKLEY. I do not want to take the Senator's
system for all the people of the United States; I take the time, but I derived the impression early in his remarks that
contrary view. My philosophy is quite different from that his main objection was that the payment of the pension, the
of the distinguished Senator from New York, distribution of the fund, is so tied in with the collection of
Mr. WAGNER. The Senator misunderstood me, I am the fund as to make them one and the same transaction,
sure, and that, therefore, the bill would be subject to grave con­
Mr. GEORGE. I think that the pensioning of the people stitutional question, whereas either transaction standing, on
of the country is essentially within the reserved powers of its own bottom, would not be subject to that fear.
the States. Mr. FLETCHER and Mr. CLARK addressed the Chair.
Mr. WAGNER. As a general proposition, I1agree with the The PRESIDING OFFICER. Does the Senator from
Senator. I am trying to have clear in my mind the particu- Georgia yield; and if so, to whom?
lam objection the Senator raises to the proposed legislation. Mr. GEORGE. I yield first to the Senator from Florida.
As I understand, the Senator feels that there Is a' serious Mr. FLETCHER. As I undecstand the decision in the
constitutional question involved because we are levying a tax Child labor case, it was to the effect that, although the act
for the payment of pensions upon the employers of the Par'- purported to rais revenue, as a matter of fact, it did not
ticular workers benefited. raise any revenue.
Mr. GEORGE. And the employees, too. Mr. GEORGE. Exactly.
Mr. WAGNER. Yes; and the employees, too. Does the Mr. FLETCHER. The Supreme Court held that It wa
Senator feel that we would be on safer ground if we taxed never intended to raise revenue
 1935 CONGRESSIONAL RECORD--SENATE 9517
Mr. GEORGoE. Exactly; and that Is what I am trying to old-age pensions, might not the Court very well find that
say here. In that respect the principle is in point that this the Congress did make a proper classification for the pur­
Proposed act does not raise any revenue for the General pose of imposing the tax?
.Treasury, because all the money that it does raise is taken Mr. GEORGE. It might find it, but let me ask the Sen-~
out and devoted to this specific purpose. ator from New York, if the taxing provision of the bill
Mr. FLETCHER. I was going to ask the Senator, if this should be stricken down, would he undertake to justify the
proposed act does, in fact, raise any revenue? provision for old-age annuities running, as it does, to spe­
Mr. GEORGE. It is not intended to raise revenue, but it cial classes if we are forced to go to the General Treasury
Is intended to furnish support to the old-age-annuity and for the money?
UnemPloyment..insurance sections of the bill. Mr. WAGNER. Not
Mr. FLETCHER. Then the Supreme Court held that the Mr. GEORGE. The Senator very frankly says " no.'
Child Labor Act was an encroachment upon the police pow- Mr. WAGNER. I say "no" because I am for the in­
ers of the States, and that was really its purpose, in effect, surance system.
If it wase good for anything; that it deprived the States of Mr. GEORGE. I understand, and I am asking the Sena­
the exercise of their police powers. Does this bill interfere tar the question if the taxing provision of the bill should be
With the establishment of old-age pensions and legislation stricken down, would the Senator undertake to restrict
on the subject by the States? title la to those employees who now come within It?
Mr. GEORGE. No, it does not, I may say to the Senator; Mr. WAGNER. No. I should say we would have to re­
I do not understand it so interferes at all, vise the classifications altogether, of course.
Mr. WAGNER. Mr. President- Mr. GEORGE. I understand the Senator's viewpoint,
The PRESI3DING OFFICER. Does the senator from Mr. WAGNER.. I think the Senator and I do not dis­
Georgia Yield to the Senator from New York? agree on that point.
Mr. GEORGE. My time is limited on the amendment. Mr. GEORGE. I know we do not.
Mr. WAGNER. I will give the Senator some of my time, Mr. WAGNER. I am very confident that it is a proper
although, if it annoys him. I will not interrupt the Senator exercise of the taxing power and that the incidental pur­
further, pose is valid for that reason.
Mr. GEORGE. I yield to the Senator from New York. Mr. GEORGE. I am not confident of it, and if time suf­
Mr. WAGNER. I desire to have a clear understanding of ficed I should be glad to go into the constitutional question
the Senator's point. The two features of the bill, paying the at length.
pension and raising the taxes, are separated. As I under- The Senator from New York now admits--and it does his
stand the proposed legislation, when the tax is collected it is conscience and humane purpose very great credit--that if
to be paid into the General Treasury? the taxing provision of the bill should be stricken down he
Mr. GEORGE. Yes; that is true, would limit the benefits under title II to those who now
Mr. WAGNER. And out of the General Treasury there would receive them under title UI. He is quite right about
Wil be made an appropriation for the payment of the it. Therefore, I have said that title VflI is tied in inesLap­
pension? ably with title II, and its sole purpose is to impose a tax
Mr. GEORGE. Exactly. f or setting up a system of insurance and old-age annuities
Mr. WAGNER. In answer to my inquiry a short time ago, Mr. WAGNER. Mr. President, will the Senator yield
I understood the Senator to say that he did not doubt further?
the power of Congress to make an appropriation for the Mr. GEORGE. Will the Senator please let me finish my
purpose of paying old-age pensions to a class not arbi- statement? I think I have been quite liberal in yielding.
trarily selected. Thus, even if the court should hold that Mr. WAGNER. The Senator made an assertion, but what­
the classification of those taxed was an arbitrary classifica- ever I say cannot bind my colleagues -as to what should be
tion and therefore unconstitutional, nevertheless the re- done in the event the tax provision is stricken down.
xnainder of the bill, the portions providing for the payment Mr. GEORGE. I1understand that, but I understand the
of old-age pensions, could survive such a decision, could it real proponents of the legislation-
rnot? The PRESIDING OFFICER. The time of the Senator
Mr. GEORGE. Mr. President, I was not considering that from Georgia on the amendment has expired. Does the
phase of it; I was considering the taxing power as being Senator desire to be recognized on the bill?
in fact, under this bill, tied in with the particular provision Mr. GEORGE. I shall take my time on the bill.
of title II, and a portion of title fII of the bill. Mr. BONE. Mr. President, will the Senator yield for a
Mr. WAGNER. But the Senator understands that th question?
tax, as collected, is paid into the General Treasury? The PRESIDING OFFIER Does the Senator from~
Mr. GEORGE. I do, under the bill, and I so stated. Georgia yield to the Senator from Washington?
Mr. WAGNER. Exactly. There is an appropriation for Mr. GEORGE. I1yield.
paying old-age pensions? Mr. BONE. Is it the view of the Senator that any effort
Mr. GEORGE. Yes. on the part of the Congress to set up a general old-age
Mr. WAGNER. So it could very well be held by the Court Pension system would involve a vested property right, the
to be constitutional, right to advance a claim for monthly pension from Fed­
Mr. GEORGE. If the tax was stricken down, it could eral sources, and that a system of that kind would infringe
very well be that the other portions of the bill might be held upon the Constitution in a way to make it unconstitutional?
to be valid: I am not controverting that; but I do say it is Mr. GEORGE. I am not discussing that question.
not within the granted power of Congress to set up directly Mr. BONE. I uaderstand that.
this kind of a pension system in the UI~ated States. It Mr. GEORGE. The bill grants benefits to aLspecial aMd
might be done, but I am tryIng to show that, despite the limited class and it imposes a burden upon a special anid
conscious and undoubted effort to separate the tax from the limited class.
scheme set up in title II1 of the bill, nevertheless, the Court Mr. BONE. My question was quite outside of that point.
will look beyond the mere words or mere form and to the Mr. GEORGE. I would rather not go into that wider
substance of the thing, and they will say that they are tied field. I am going to undertake to say further as to the
together, or, as I said in the beginning, they are likely to constitutionality of the tax that even the tax, to, be con­
say they are tied together, or at least a serious question Is stitutional, must be imimune against the provisions of the
raised as to whether they are tied together here, fifth amendment. In other words, it Is permissible under
Mr. WAGNER. Mr. President, I should like to ask the the fifth amendment to question the validity of the tax,
Senator one further question. Assuming that they are tied Here Is a tax upon certain employers. The beneficiaries
together, and the Court finds that the tax Is levied upon a of the tax a-re those who come within title U., let us may,
class that really gains a benefit through the payment of of the bill, and they are a limited class. The tax oa em­
9518 CONGRESSIONAL RECORD-SENATE JUNqE 18
players to support the system is levied at a uniform rate Industry carry on as It has been carrying on through a
without regard to the hazards of industry. The mining period of years in building up these private systems.
company which sends its men down to the bowels of the It Is said that only 1 percent or a fraction of 1 percent
earth, where fatalities often occur, has to bear the same of aUl employees are now able to receive benefits through
burden of tax as the industry, In which retirement, acci- these private systems. Grant it; but up to this time the
dents, and death rarely and seldom occur. That is another Federal Government has done nothing to Induce, to aid. or
feature involving the constitutionality of the measure, but to assist, and remarkable progress has been made in setting
I do not intend to do more than say that no responsible up some 450 private systems now operating In the United
lawyer who has been in a courthouse three times would States, and making at least some provision for a large
dare say that the provisions of this bill which have been number of employees working for the individuals and com­
discussed are not subject to serious question. panies which have established these private systems.
I do not have to go further than that, and on that predi- I with it to be definitely understood that the purpose and
cate I say why strike down the private systems which have objective of old-age annuities and of unemployment insur­
been built up through the years and which have granted ance have my heartiest approval; but In my judgment there
benefits to employees? Why not preserve them? is no necessity for the impatience with which we seek to do
The answer is, " We do not strike them down. They WMl things which we cannot do, and then the courts strike them
still go on ", when we know that will not be the case. Our down and destroy all that industry has done.
mail is full of assurances by responsible men that they will The distinguished Senator from New York [Mr. WAc.mI
be compelled to abandon their own systems if this tax sball has gone from the floor: but I recall that he was equally
be imposed upon them and if they shall have to pay it. certain that the railway pension retirement act was con­
Also it was answered us in committee that none of the stitutional, and yet the Supreme Court-by a divided Court,
private systems grant equal benefits to those provided in it is true-said that it was not.
title II1 and title III of the bill. If none of them grant equal F'rom this bill are already- excepted State employees and
benefit, pray answer me why would private industry maintain Federal employees, as the Senator from Missouri said, per­
a system which did not grant equal benefits, but at the same haps the largest class of employees working for one concern
time pay taxes to set up another system which increases the or one corporation or one political subdivision or one soy­
benefits over those of the private system then in existence? ereignty in all of the United States. Already they are ex­
In other words, it is said in one breath that the private sys- cepted from the bill. They do not pay any tax. Of course,
tem can do more and will do more, that the private com- the Government does not, as a tax, nor do the employees
panies will maintain their private plans, and in the next who work for the Government or for the States or for the
breath we are answered and told that not one of the private municipalities, nor does agricultural labor or domestic labor.
systems maintained by private companies in this country, I am not saying that those exceptions are not properly
bestows benefits equal to those provided by the bill, granted; that if it were a mere matter of classification they
Now let me answer those who stand firmly against the would not constitute a proper basis for classification. I am
amendment, and they ought to be answered for the benefit of not asserting that at all; but I am saying that the bill Is
the American people. There is but one solid ground of objec- already open to the constitutional objection which I can­
tion to the amendment and that Is the basic ground upon didly concede may be emphasized by further exceptions of
which it stands. Those who oppose. the amendment want classes on whom it does not operate. At the same time the
to put in the Federal Government the business of pensioning question is there, and the act may go down before the
the people of the country. They want to centralize power decision of the Court; and if It does, then we shall have
here. They want to socialize and federalize the Nation in all lost, after some 1 or 2 years of trial, all that has been
its affairs. Otherwise they would accept the amendment and gained by the efforts of private employers to set up their
say, "We will not take the risk of striking down the private own systems,
Insurance systems in this country which have been built up Mr. WALSH. Mr. President-­
through the years. We will not take the risk of destroying The PRESIDING OFFICER. Does the Senator from
them, but of the private companies and individuals setting Georgia yield to the Senator from Massachusetts?
up their own insurance plans we will require-we will abso- Mr. GEORGE. I yield to the Senator from Massachusetts.
lutely demand of them-that they set up a plan equal to that M.WLH nteeetteSntrsol ests
set up in the law of Congress. If they do that we will let fldrha tAHis measure isvcnstitutioenalor w houldhe favrthe
them operate. fe htti esr scntttoawudh ao h
It may be said-it can be said, I concede, that the exemp- Clark amendment?
tion from the tax of those who set up an acceptable and aMendmEntG. ItikIsol tl ao h lr
approved plan of insurance or of benefits, may emphasize aedet
the character of the bill, may further open it to attack upon Mr. WALSH. in other words, It is not merely the IrreP­
constitutional groundls; but it is already open to attack. arable loss that may result to employees who are now ra-
It is inescapable that the Court will be called upon to )P% celving benefits under private arrangements with their em-
upon this bill. I do not wish to assert dogmatically that the ployers about which the Senator is concerned. Of course,
Court will strike it down, but I do wish to say that no well- there would be almost irreparable harm to them If this
grounded lawyer can say certainly and dogmatically that the measure should be found to be unconstitutional.
bill will ultimately prevail. Surely there is serious question Mr. GEORGE. That is quite true.
of Its validity when we look beyond the form and words Mr. WALSH. But the Senator goes further than that,
of the bill to Its substance, and regardless of the constitutionality of the measure, he ls
The real objection to the amendment, the basic objection inclined to favor lifting out of it those private companies
to the amendment, is not that it takes out the strong and which make beneficial arrangements with their employees?
leaves the weak to pay the tax, is not, in my humble judg- Mr. GEORGE. I do, but I was stressing the other Point
ment, the ground which has been advanced, but the real upon this particular amendment.
objection is the overweening desire of those who seek to Mr. BARKIEY. Mr. President, in that connection, of
concentrate in Washington all power and reduce the states course, if the courts should declare the act unconstitutional,
to a system of vassalage. and to convert a free people, able It would then have no effect upon these private annuity
and willing to manage and conduct their own affair, Into arrangements. They would go on just as they are now.
humble supplicants for the crumbs and for the benefits Mr. GEORGE. Exactly; but In the meantime they would
which may fall from the national table. I do not think- It have been destroyed. The employers would have abandoned
Is healthy or wholesome. The least that can be done is to any effort to maintain their organizations. They would not
take this amendment and let the private systems continue wait for a year or two until the Supreme Court Passed upon
to function If they grant equal or superior benefits. and let this measure and abide by the decision, or go Into the courts
 1935 CONGRESSIONAL RECORD-SENATE 9519
at the expense of heavy litigation to test the constitutional- Mr. COPELAAND. Mr. President, I have been much im-'
ity of the measure. pressed by what the author of the amendment has said, ag
Mr. CLARK. Mr. President- well as by what the Senator from Georgia [Mr. GEoRGz] haS
Mr. GEORGE. I yield to the Senator from Missouri. stated.
Mr. CLARK. I received this suggestion from the head of I desire to use a part of my time in asking -questions of
one of the largest banks in the State of Missouri, who told the Senator from Missouri regarding the effects of this plan.
me that they have had a pension system for more than 20 I am disturbed because in my State many industrial con-i
years, and that they now have a large number of employees cerns have arrangements for insurance and of course prefer
who will be eligible to retirement in the next year or two. not to be disturbed. At the same time there are mani?
If the bill should be passed without the amendment I have citizens of New York who feel that to permit the continu­
offered, and should strike down that pension system, and ance of the private insurance arrangements would result
then the act should be declared unconstitutional, those men materially to reduce the level of age of the employees in
would simply be deprived of their rights. such industrial establishments. For these reasons I wish
Mr. HARRISON. Mr. President, will the Senator yield to to ask a question or two of the Senator from Missouri,
me? questions founded on an analysis of his amendment which
-,Mr. GEORGE. I yield to the Senator from Mississippi. has been given to me.
tMr. HARRISON. The Senator from Missouri will recall We will assume that a basic condition to permitting an
that the bill especially exempts Government agencies and employer to maintain a private pension plan would be the
Government employees, also such persons as are employed establishment of benefits at least equal to those under the
by a national bank. Security Act. The two main factors in cost would be the
Mr. CLARK. I will say to the Senator that this is not a general level of wages and salaries paid by, the employer.
national bank, and the ages of his employees. The younger the employees,
Mr. HARRISON. If It Is a part of the Federal Reserve and the higher the level of pay, the greater the advantage
System, it is exemptJ to the employer in buying annuities from a private insurance
Mr. CLARK. This was simply an illustration; not that company.
that particular bank was important. I used the illustration Of course, these two basic factors are In part opposed
to show what might happen In any industry where there is to each other, since high age distribution is usually asso­
now established such a pension plan. It does not make any ciated with higher than average wage&.
particular difference about whether or not that particular Mr. CLARK. Mr. President, will the Senator yield?
bank would be exempt, if the same thing ran through in- Mr. COPELAND. I yield.
dustry wherever private pension plans are now existing. Mr. CLARK. Under the amendment as It Is now before
Mr. WALSH. Mr. President, may I ask the Senator from the Senate the objection the Senator has Just raised is taken
Missouri a question? care of by the provision that the employer must pay into his
Mr. CLARK. The Senator from Georgia has the floor, private pension system or Into any other system not less than
The PRESIDING OFFICER. Does the Senator from the amount of the tax he would pay in under the Govern­
Georgia yield to the Senator from Massachusetts? ment plan; so that if there be any advantage to an employer
Mr. GEORGE. I do. who employs younger men, that advantage must go to the
Mr. WALSH. Would the Senator from Missouri accept employees, because the employer will be able to buy more
an amendment that would permit the status quo to con- annuity with the amount of tax he is required to pay In.
tinue between employees and employers who now have in- Mr. COPELAND. That is a very satisfactory answer; but
surance benefits until such time as the Supreme Court might I desire to press the matter for the moment, In order that nmy
pass upon the constitutionality of this measure? Iconscience mav be clear.
Mr. CLARK. I should be perfectly willing to accept such Does the Senator from Missouri believe, that this private
an amendment as that, but I do not think such an amend- plan would tend to the employment of fewer persons over
ment would reach the whole question, middle age? The problem of employment for a person past
Mrt. WALSH. It would not completely take care of the middle age, of course, is rapidly becoming one of the most
Senator's objection. serious social problems with which we have to deal. Would
Mr. CLARK. That is perfectly true, the effect of the amendment 'which the Senator has offered
Mr. WALSH. It would in part, but It would not completely be to intensify that problem?
do so. The Senator still thinks, notwithstanding the passage Mr. CLARK. I do not see how that could possibly be true,'
of this bill, that private employers who desire to make special in view of the fact that the employer at every stage of the
arrangements with their employees should be permitted to game, at every period of paying the tax, must pay into the
do so? private pension fund not less than the amount of tax; and
Mr. CLARK. I do not think there is any question about it. then, when the employment of the employee is terminated.
Mr. GEORGE. Mr. President, I had not intended to oc- there must be paid into the Government fund as much as the
cupy the time I have taken, and I had not Intended to dis- tax would have been compounded at 3 percent annually,.
cuss the general bill under consideration. I had intended to Mr. COPELAND. I thank the Senator. I take it to be his
confine myself strictly to the Clark amendment. My pur-. view that the amendment would not aggravate unemploy-a
pose was to point out at least the possibility of serious con- ment among the middle aged.
stitutional objection to titles II and VIII of the bill as it now Mr. CLARK. I do not see how it possibly could.
stands; admitting that further exceptions from those who Mr. COPELAND. I assume the Senator has seen the same
are made liable to the tax may still open the bill somewhat analysis to which I am referring.
to more direct attack, nevertheless, that question Is there, Mr. CLARK. I have never seen that particular analysis,
and the Supreme Court will be compelled to meet it when- but I may say to the Senator that the same question was
ever a proper case reaches that tribunal; and that if the raised In the committee, and that the amendment was drawn
Court should hold the act unconstitutional, all that has been to meet that specific objection.
gained by individuals and companies that have operated their Mr. COPELAND. So the Senator Is quite satisfied that
own systems probably would be lost; at least, the larger part the retention of these successful private systems would in no
o~f it would be lost. While many of the systems operated by sense endanger the employment of persons of advanced age,
individuals and corporations and associations may be open and could not be used by, the industries 'Which have such
to question, while many of their practices may be subjected systems to coerce employees in any sense?
to certain sharp criticisms, nevertheless on the whole they Mr. CLARK. -I do not see how It possibly coukl. I may
have accomplished great social good for their employees; and say, to the Senator from New York that I have agreed with
therefore this simple amendment, which gives the election the Senator from Washington (Mr. Scawxu~mmcsl to ac­
to the employee to go under the Federal system or to remain cept an amendment to my amendment _Ich will provide
in his private bistem. ought to be adopted as a part of this specifically that the election to go under a private system
Proposed legislation. shafl not In ezy sense be -ade a condition of emnploy'ment ow
9520 CONGRESSIONAL RECORD-SENATE JUNE 18
of retention of employment, which I think would be an Im- man of the annuity insurance committee of that company in
provement on the amendment, which he states:
Mr. COPELAND. May I ask the Senator from Washing- The employee pays 3 percent of his wages into the fund; the
ton what his amendment is? It perhaps covers the very company pays approximately 4 or 4% percent Into the fund.
point I have in mind. Over 99 percent of our employees sre under the plan, which In
Mr. CHWLLEBACHMr Prsidet. n pge 2 lie16Insured with the Metropolitan Life Insurance Co. The average
Mr. CHWLLEBAC.M. Pesient onpag 2,lin 16pension payable exceeds the maximum $85 payable under the
of the amendment of the Senator from Missouri, after the Government plan.
word "plan ". I propose to insert a colon instead of the Ishudlktoratatgin
period and the words "1Provided, That no employer shall Ishudlktoratatgan
make election to come or remain under the plan a condition The average pension payable exceeds the maximum $85 payable
precedent to the securing or retention of employment." I te odudrti lnteaeaeaniyI
Mr. CLARK. I am glad to accept that amendment. I te odudrti lnteaeaeaniyi
Mr. COPELAND. I think that is a very valuable amend- greater than is possible under the Government plan.
ment. As part of this plan, each employee Is carried for life insurance
Mr. SCHWELLENBACH. If the Senator has no objection, to the extent of 1 year's salary, for which he pays six-tenths of I
tis tme.percent
migh offr itat and the company pays the balance.
I t miht
ths tme.Our
fferit company desires to continue with Its private pwlan
Mr. COPELAND. I wish the Senator would do so, because I ask the Senator this question: When a company has been
It would help to answer the criticism I have in mind, willing voluntarily, without any compulsion of law, to do
Mr. CLARK. I accept the amendment, and modify my more for its employees than is likely or than would be per-
own amendment in accordance therewith.mitdudrteposdacwyhulnttoe
The PRESIDING OFFCER. The Senator from Washing- empltted s hader the proposedo tact h hudnt
pan thosena
ton offers an amendment to the amendment of the Senator eMploee have. the breniefito that additionalo plan? Ne
from Missouri, which the clerk will report. Mor.LONG. tomr.e eietwl h eatrfo e
The LEGISLATIVE CLERK. On page 2, line 16, after the word York yiPeld tome? eld
"plan "', it is proposed to insert a colon instead of the period Mr. COP ANGI . yirelyd.sr ocl h atnino h
and the following words: Senator from Missouri to the fact that under most of thi
Provided, That no employer shaul make election to come or re- private pensioplnane-moyedsnthveopre
main under the plan a condition precedent for the securing or re-o ln ne-mlyede o aet rv
tention of employment, himself to be needy in order to get his pension.
Mr. CLARK. That is perfectly true; the pension accrues
The PRESIDING OFFICER. The question is on agreeing as a matter of right.
to the amendment to the amendment. Mr. LONG. It accrues as a matter of right, but under the
Mr. McNARY. Mr. President, may I inquire whether this particular bill before us that would be wiped out, and unless
Is a perfecting amendment to the amendment offered by the a man proved himself to be a pauper he could not qualify for
Senator from Missouifl? the pension roll.
The PRESIDING OFFICER. It is a perfecting amend- Mr. COPELAND. Mr. President, the great trouble In the
ment offered by the Senator from Washington [Mr. SCHWEL.- United States, and I suppose all over the world, Is that when
LENBACHI. a man or woman approaches middle life, or passes middle age,
Mr. CLARK. I accept the amendment offered by the Sen- and is out of employment, It is almost impossible to find new
ator from Washington, and modify mny own amendment in employment. There is almost unanimity of opinion among
accordance therewith. employers that such persons are not desirable employees; the
The PRESIDING OFFICER. The question is on agreeing situation is pathetic.
to the amendment to the amendment. My only regret about the bill is that we have not been a
The amendment to the amendment was agreed to. little bit more generous in It I assume we will go just as
Mr. COPELAND. Mr. President, I take it that answers far as we can, and we ought to, but certainly if there Is one
the criticism I had in mind, namely, that the encourage- thing which stirs the emotions and should excite us to do
ment of private pension plans would place powerful coercive the right thing it is the urge to take care of aged persons.
weapons in the hands of employers. We can find means to aid the babies, we. establish institu-
Mr. SCHWVELLENBACH. I may say to the Senator that tions to prevent disease, but the most amazing thing Is that
that was my purpose in preparing the amendment. the homes for the care of old people are almost bankrupt.
Mr. COPELAND. I think it is a very valuable addition to If we cannot through voluntary contributions maintain in
the amendment of the Senator from Missouri. decency persons in old age, then certainly it is time for the
As I review the amendment, as it now stands, as -om- Government to step in and undertake what is intended to be
pared with the amendment as it was originally offered, I done by this measure. As I have said, my only regret Is
think it has been very greatly improved. To a great degree that we cannot deal more generously with our aged citizens.
it answers the criticisms which have been passed upon it. Mr. HARRISON. Mr. President, before a vote is taken on
I am glad, because, as I have already said, there are many the amendment I desire to say to the Membership of the
private plans in force in my own State, and they have been Senate that there was no question presented to the commit-
very successful in most instances. Yet I would not want tee related to the pending legislation to which we gave more
anything to interfere with the proposed legislation, which to consideration than to the question before us. It was Pre-
my mind is very important. sented by the distinguished Senator from Missouri (Mr.
The greatest tragedy in the world is the tragedy of old age CLARK] and the distinguished Senator from Georgia [Mr.
In poverty, and whatever we can do to relieve the distress of GEORGE].
mind of those of our people who have not been fortunate Mr. CLARK. Mrt. President, will the Senator yield?
enough to accumulate the wherewithal to be maintained in Mr. HARRISON. I yield. I mean the idea was presented
old age is a very desirable and necessar y thing to do. At by the Senator from Missouri.
this time, too, there are thousands of families, I suppose Mr. CLARK. If the Senator will permit. I merely desire
millions, who thought they had prepared for the rainy day, to recall to the Senator's mind the fact that the amendment
but by reason of the depression, and the circumstances in- was lost in the committee on a tie vote only.
volved in it, they have come to be almost as bad off as many Mr. HARRISON. That corroborates my statement that
who were born and have lived all their lives in poverty, the committee gave the matter every consideration
Mr. CLARK. Mr. President, will the Senator yield? When the question was first presented to the committee.
Mr. COPELAN4D. I yield, the amendment appealed to me, as one member of the comn-
Mr. CLARK. I should like to call the attention of the mittee, and I am sure it appealed to others. I thought that
Senator to a plan in force in a company in his own State as those institutions which had built up private Pension sys­
an example of private pension plans. I refer to the Socony tems of their own should be commended; that they had
Vacuum Oil Co. I have in my hand a letter from the chair- taken a great forward and progressive step and that they
 1935 CONGRESSIONAL RECORD--SENATE 9521
should be encouraged because they were forward looking; Mr. HARtRISON. Of course, they can fire them if they
and personally I did not want to see anything done by legis- want to, so far as direct provisions of either bill or amend­
latilon which might hamper their progressive march. ment is concerned.
When we begin to analyze the proposition, however, from Mr. CLARK. In other words the same situation exactly
every angle and to stop, look, and listen, we find there is exists under the bill as it is proposed which will exist under
more to it than might appear at first glance, and I changed the bill with the amendment in It, is that rnot correct? Is
from the fist opinion that I held about the matter. that not precisely the situation?
We had before us some experts: one gentleman from Mr. HARRISON. There Is nothing in the bill which comn­
Rochester, N. Y., Mr. Folsomi, who made a splendid presenta- pels an institution to keep somebody on, but there Is a pro­
tion and was thoroughly informed on the matter. He is a vision that if a man has worked a number of years or has
man of extraordinary ability and has charge of the pension reached a certain age, or he dies, that he or his heirs shall
system for the Eastman Kodak Co. It is my impression that get a certain fixed payment.
he is thoroughly satisfied with this provision as written now. Mr. BLACK. Mr. President, will the Senator yield?
He appeared before us when the bill was being considered in Mr. HARRISON. I yield.
executive session by the Finance Commi~ttee. Mr. BLACK. It does not have to be in the law, It seems
Mr. CLARK. Mr. President, will the Senator yield? to me, for the reason that if the company buys a private
Mr. HARRISON. I yield, annuity for all of its men it would certainly be able to buy
Mr. CLARK. So far as Mr. Folsom is concerned, the Sen- it much cheaper if it were to employ men from 21 to 25
ator will recall that In the executive session of the Finance than it could if it kept men from 50 to 65 years of age.
Committee, when this proposition was under discussion, the Mrt. HARRISON. Absolutely.
statement was made by Mr. Murray W. Latimer that Mr. Mr. BLACK. So there is the strongest inducement in the
Folsom did not approve this amendment, and I have here a world for them to endeavor to get the insurance the cheap­
communication from Mr. Folsom in which he says that Mr. est way possible, and you would find them competing to get
Latimer was not authorized in any way to say that, cheaper rates of private insurance by employing younger men,
Mr. HARRISON. Mr. President, I am not in a combative 11 they were permitted to discharge their older employees.
mood or of such disposition at all. I am in the most ami- Mr. CLARK. Mr. President, will the Senator yield?
able spirit in the world. My greatest desire is to try to Mr. HARRISON. I yield.
finish the debate on the bill this afternoon and send the bill Mr. CLARK. If the Senator from Alabama will take the
to conference; so I admit, if the Senator makes the state- trouble to read the amendment he will find a specific pro­
ment, that it is so. I have been led to believe that he is vision in the amendment that the employer under private
satisfied with it. Mr. Latimer, who is one of the great ex- practice shall pay into the private-pension plan not less than
perts on this legislation, appeared before the committee and, the amount of the tax. So that his argument of there being
if I correctly recall his testimony, he said he met with the an Incentive to employ younger men absolutely falls down.
representatives of nine of the biggest industrial institutions If it be true that by employing younger men he is able to
of the country, which had inaugurated and carried on for get his insurance cheaper, then by reason of the fact that
many, years these private pension plans, and he said that he must pay in at least the amount of the tax he can simply
of the 9 representatives present 5 of them thought It was get more annuity for the employees.
better for these corporations to come under the Govern- Mr. HARRISON. The Senator at one place in his amend-
ment's pension plan. merit provides:
Let us see now why some believe that it is better to have 5~xcept that If any such employee withdraws from the plan
one system than for business Institutions to continue their before he attains the age of 65. or if the Board withdraws Its ap-
individual pension systems and not participate in the Pro- Proval of the plan, the service performed while the employee WMr
pose
wa pln.
ws pln.
pose pintdIt ot b te
pontedoutby th dstiguised
ditinuised en-under such plan as approved shall be construed to be employment
en-as deftned in thia subsection.
ator from Delaware [Mr. HASTINGS) the other day that there I te odi hr sapiaeidsra nttto
is favored treatment accorded to those in the old, ripe years I te odi hr sapiaeidsra nttto
over those of younger years. We admit that. It is just so. with a private pension system, and it should go bankrupt
It cannot be otherwise. They have worked many years Just before an employee became 65 years of age, or entitled
in comparison with the short period they will be under the to the pension, the responsibility would be placed on the
proposed annuity system, and consequently we give them Government, and it would have to pay the pension and not
proporti.onately more for the time they are in the system the private institution, because there would be nothing left
than we do younger men. of that institution. There Is another provision in the
Then some of us believe that in a great crisis such as the amendment which says that he can receive back the amount
present, with problems such as now face -us, that favored he paid in-
treatment should be given to help to bear the burdens of Mr. CLARK. Plus 3 percent Interest; exactly what he
the older worker. However, that was the Senator's criti- would get under the Government system.
cism of the bill. When he compared the benefits and bur- Mr. HARRISON. Yes. There is this about that. The
dens imposed by this measure, he found that the old re- amount he pays in amounts to 3Y2 percent of his wages,
ceived larger benefits compared to burdens. If these pri- payable in the case of death to the estate. What the em­
vate institutions are permitted to carry on their private ployer paid in thus goes into the Federal Treasury of the
pension plan, there is nothing In the amendment of th United States, if the employee is in the Federal system,
Senator from Missouri [Mr. CAxi.~ic which prevents them and is lost to the Treasury if the employer has a pri-?ate
from doing what they please in the matter of discharging system. The older man would naturally be left in the
men when they reach a certain age, because of the heavy Federal system, and funds from general taxation paying
obligations which are imposed upon the -prisrate industrial benefits under the Senator's amendment.
institutions, and take on in their places younger men, be- However, aside from all the analysis which we might go
cause the younger the men are the less heavy are the ob- on with here, which I was hopeful we might avoid, the simple
ligations. question, Members of the Senate, is this: We did not adopt
Mr. CLARK. Mr. President, will the Senator yield? this amendmnent which was offered in the committee be­
Mr. HARRISON. I yield. cause, first, we thought it might be an encouragement to
Mr. CLARK. Is there anything in the bill as It now private institutions to stay out of the system, weakening the
stands which Prevents an industrial company from laying Federal plan and giving a leverage to private Institutions to
off men when they reach a certain age? discharge their employees when they had reached a certaini
Mr. HARRISON. Yes. age, and to take on younger men, or that same Institution~
Mr. CLARK. What Is in the bill that prevents that, would go out and take Federal insurance under this plan
which is not in the amendment? to the number of its older men, but as to the younger meu
9522 CONGRESSIONAL RECORD-SENATE JUNE 18
they would carr private insurance, because the burden them, and when they shall pass off the stage of life their
would not be so great in one case as in the other case; and, estates will receive the money to which the worker was
secondly, some of us believed that it would add to the doubt- entitled. But if an industry sets up a private plan under the
fulness of the constitutionality of this bill, Of course. I amendment it is separate and apart; the board to be created
do not know, and no one else can know what the Supreme will not be authorized to investigate, for instance, what re­
Court will hold. serve the private institution may have.
Mr. CLARK rose. Mr. CLARK. The board has to approve the plan.
Mr. HARRISON. I1will yield to the Senator in a moment. Mr. HARRISON. Oh, yes; the board has to approve the
I had not completed my sentence. I can talk so much better plan when the application is first made, but there is nothing
when the Senator is sitting down. No one in the world can in the amendment with reference to the board following
tell what law is going to be held unconstitutional until It is through to determine whether or not the reserves may be dis­
passed on by the Supreme Court. I am not criticizing the sipated, or what may become of them, of what the financial
Supreme Court. They have their functions to perform and status of the Industrial corporation is; and, consequently,
we have our functions to perform; but I might say inci- after men have paid into this private fund for years and
dentally that when the question comes up before the Senate years, if the institution becomes bankrupt, they may lose
of two-thirds of the Justices passing on the unconstitu- their all.
tionality of congressional legislation I am going to support Mr. CLARK. Mr. President, will the Senator yield?
that proposed amendment to the Constitution of the United Mr. HARRISON. I yield.
States. Mr. CLARK. It is perfectly apparent the Senator has not
Mr. LONG. Mr. President, what is that? What did the read the amendment, because in paragraphs (c) and (d),
Senator say? page 3. It is specifically provided:
Mr. HARRISON. It is not worth repeating to the Sena- - (c) 'Me Board shall have the right to cafl for such reports from
tor. [Laughter in the galleries.] I do not suppose that the the employer and to make such Inspections of his records as will
Senator agrees with me. satisfy it that the requirements of subsection (b) are being met.
In
In te CildLabr
cse he
te cse he Spree
CildLabr Spree Curtdiddecareand
Curtdiddecaresuch to make annuity
private such regulations as will facilitate
plans In conformity the requirements.
with such operation of
that act unconstitutional. They declarid it unconstitutional (d) The Board shall withdraw Its approv'al of any such plan
when Congress levied a tax upon products made by child upon the request of the employer, or If It finds that the plan or
labor, or by those under a certain age, which entered into any action taken thereunder fails to meet the requirements of
Interstate commerce. subsection (b).
Here the measure presents a uniform system of old-age So the board has the authority to follow up the opera­
benefits. The taxing features of the bill are entirely sep- tion of the private plan, and it is the duty of the board to
arate from other provisions. These taxing provisions are do so, though I do not concur in your conclusion, but con­
to raise revenue which, it is believed, will roughly equal ceding it for the moment.
anticipated appropriations for unemployment insurance and Mr. HARRISON. If the board should withdraw Its ap­
a system of annuities. Whether that will have any influ- proval of the plan, and the fund has been dissipated, or
enice on the Supreme Court I do not know, but it was there is not sufficient reserve to meet the demands upon
drafted by some very fine experts, and the tax features are the fund, or the plan Is discarded. then what is going to
over here in a part by themselves, so far as the constructive happen to the poor individual who has been paying into the
features of this legislation are concerned. fund for many years and who is shortly about to reach the
Mr. CONNALLY. Mr. President, will the Senator yield? age limit?
Mr. HARRISON. I yield. Mr. CLARK. The reserves will largely be invested under
Mr. CONNALLY. It will not have any effect on the supervision of the board and under such regulations as the
court unless the Senator talks about It. board may make.
Mr. HARRISON. The experts drafted it, and it Is there. Mr. HARRISON. The amendment does not say "under
and we hope that it will have its Influence and Its bearing, the supervision of the board."
However, If this amendment were adopted, it would seem Mr. CLARK. Let me read the Senator the provision:
to me that It would make the measure more doubtful than Mhe contributions of the employee and the employer shall be
otherwise, because with this you are imposing a tax and deposited with a life-insurance company, an annuity Organization,
trying to compel people to set up unemployment plans, or a trustee, approved by the Board.
because you say to them, " If you do not go into a private Mr. HARRISON. Yes; but It does not soyv anything about
insurance plan, wn are going to tax you." That might be continuing supervision, as I understand. .Then a concern
held analogous to the Child Labor case, makes application for the approval of a particular plan the
Mr. COSTIGAN. Mr. President- board has authority to approve it. but It has no jurisdiction.
The PRESIDING OFFICER. Does the Senator from Mis-. as I understand, to follow through with subsequent in­
sissippi yield to the Senator from Colorado? vestigation and with general supervision and control of the
Mr. HARRISON. I promised to, yield to the Senator from funds of the private institution.
Missouri [Mr. CLARK] first, Mr. CLARK. Subsection 3 clearly gives the board that
Mr. CLARK. I do not desire to disturb the Senator's train authority'.
of thought, because he has left the subject upon which he Mr. COSTIGAN. Mr. President-
was talking at the time I tried to get him to yield. The PRESIDING OFFICER. Does the Senator from M1s­
I should 1!ke to get the Senator to explain merely wherein sissippi yield to the Senator from Colorado?
his statement is correct that under this amendment as it Mr. HARRISON. I yield.
now stands there could possibly be any advantage to an em- Mr. COSTIGAN. Mr. President, with his usual force and
ployer financially in staying under a private plan and being ability, the Senator from Mississippi has stated the reasons
under the Government plan, assuming that he employed for rejecting this amendment. May I ask the Senator
younger men, if he has to pay the amount of tax, anyway, whether It Is not true that the experts who have continu­
plus a further amount? ously counseled the. committee with respect to this propnsed
Mr. HARRISON. Let us take the provisions with reference legislation believe that- this amendment threatens the wel­
to the proposal in the bill as recommended by the com- fare of the older workers and Is calculated to Impair the
mittee: integrity and efficiency of the bill?
All industrial employers pay the tax Imposed, and annually Mr. HARRISON. As I have suggested, I was led to be­
appropriations are made to the reserve fund to be invested; lieve in this proposal when it was first advanced, but later
a large reserve Is to be built up through their investment, by I became thoroughly convinced that it might be used to
the Purchase of Government bonds, and so on. The pur- the disadvantage of the older men In favor of the younger
pose is to give strength to the fund and assurant* that when men; that It might affect greatly the system we are trying
employees shall reach 65 they will get the payments due to put Into operation; that It also might affect the oonstitu­
 1935 CONGRESSIONAL RECORD-SENATE ~ 9523
tiOnality of the measure; and that Is why, as one member and how much he Is to obtain; but we subsequently effected a
Of the committee, I did not support It. complete change.
Mr. BARKLEY. Mr. President, will the Senator yield? I know it was the opinion of the Committee on Finance
The PRESIDING oFFICER. Does the Senator from that the whole order should be changed and that the author­
Mississippi Yield to the Senator from Kentucky? ity should be vested in the States. The House acted first;
Mr. HARRISON. I yield. they completely rewrote the bill, and they left it to the States
Mr. BARKEUY. The point has not been raised, as I re- to say who should get a pension. The Finance Committee
call, but it seems to me that this amendment may endanger put in only the limitations that the Federal Government
the constitutionality of the proposed act on another ground. would contribute pensions to needy aged individuals. The
The Constitution provides that: $15 per month Federal contribution does not limit the pen­
All duties, imposts, and excises shall be uniform throughout sion to $30. The State may go up higher than that if it so
the United States, desires. The measure also provides that the age should be
Of course, that does not mean that Congress has to levy 65 years, with the exception that up to 1940 the State, if it
the same kind of tax on everybody in the United States; chooses, may fix the age at 70. So the measure is not one
Congress has the power to classify the people for the pur- which centralizes everything in Washington, but It is to be
pose of taxation; but within that class the tax must be left largely to the States to determine how to expend this
uniform. How can the Congress establish a class in order money.
to bring about uniformity of taxation and then lift indi- Of course, the Federal annuity the proposed amendment
viduals or groups out of that class and say, " You shall not affects is wholly a Federal matter and naturally is adminins­
be subject to the tax provided you have a private institu- tered in Washington, but this Is only one of the many phases
tion of your own "1, without endangering the constitution- of the bill.
ality of the tax on the ground of the lack of uniformity? Mr. LONG. Mr. President, will the Senator yield?
Mr. HARRISON. I agree with the Senator. I hope the Mr. HARRISON. I yield to the Senator from Louisiana.
Senate will not adopt the amendment and that it will be Mr. LONG. I notice the Senator is of the opinion that
rejected. the administration is to be left to the States. I call his
Mr. SHIPSTEAD. Mr. President, will the Senator yield? attention to the fact, however, that the board In Washing­
The PRESIDING OFFICER. Does the Senator from Mis- ton can judge that the State has failed to comply with the
sissippi yield to the Senator from Minnesota? general outline or the specific plan and can thereby elimi­
Mr. HARRISON. I yield to the Senator. nate the State from receiving a contribution. In other
Mr. SHIPSTEAD. It seems to me there is a question of words, whenever the board takes a notion it can cut off the
policy involved here. I have had, in recent years, complaints Sae
from people who supposed they were the beneficiaries Of Mr. HARRISON. No; the Senator is mistaken about that.
private retirement systems but who found that the reserve Mr. LONG. Let the Senator look on page 6.
'funds invested to carry on the retirement plan had been Mr. HARRISON. We lay down the conditions-
so badly invested that when the time came for them to Mr. LONG. But the bill lets the board be the judge.
-receive the benefits which were anticipated, and which they Mr. HARRISON. And we leave to the States to *!ay who
-expected to receive annually, the condition of the fund was shall be the persons selected to receive the Federal assist­
such that the amount received by them, in many cases, wa's ance.
very little. Others have complained that they have been Mr. LONG. But the Senator does not catch my point.
discharged from the service a year before the date for their Mr. HARRISON. Of course, reports must be made to
retirement without, at least so they claim, any Just cause. Washington.
I wonder if the committee has considered the injustices and Mr. LONG. Not only that, but the board Is the sole
the disappointments which in many cases have come to those Judge as to whether or not the act is being properly carried
who are supposed to be beneficiaries of private pension out by the States. The board is the sole judge of the facts
sys~tems. and of the law, and It cant say, "1Under the law and the
Mr. HARRISON. That, as I have stated, was among the facts we have decided that the State of Mississippi is not
reasons that caused some of us to oppose the adoption of complying with this law, and therefore it will receive no more
such an amendment as is now pending. There is nothing in help from the Federal Government for pensions." Further­
this proposed legislation that will prevent private institu- more, not even an appeal to the courts has been provided.
tions from carrying on thcir pension systems just as they The board cani cut the States off if It wants to, and my expe­
have carried them on in the past. They can do that if they rience has always been that when boards are made Judges
so desire. There Is no reason In the world because of the of the. facts and the law they fit the law and the facts to
adoption of this measure for any person who has an interest whatever they want to do.
in such a private fund and who has been a participant in a Mr. HARRISON. Of course, the States have to make re­
private pension system losing it. He will have all his equi- ports to Washington, and they should make reports to
ties and all his rights just the same. If a private pension Washington. The Federal Government will be expending
system is, as some have pointed out, better than the Govern- millions of dollars, and some agency of the Federal Govern­
ment's plan, those supporting it will have a perfect right, ment should know about the expenditure and should have
so far as this legislation is concerned, to carry it on as they reports. We do that with reference to the Federal aid for
have done in the past. If some big-hearted industry has roads, for which purpose we appropriate millions of dollars;
been doing that, it can continue to do it Just the same. Of naturally, reports have to be made and some supervision
course, it will have to pay the tax that is required under the provided. But the bill gives the maximum amount of juris-.
proposed law, but it may add that to the benefits of its diction and authority and power and discretion to the
employees. States with reference to the aid granted for old-age pen­
Mr. President, it was stated by the Senator from Georgia sions, and with reference also, I may say, to unemployment
that we are trying to centralize administration of the system insurance and provision for child welfare, and so forth.
here in Washington. I do not think he was talking about me, When this bill was first proposed to our committee it pro­
but he was talking about some who have had something to vided what kind of plan of unemployment insurance there
do with the framing of this proposed legislation. It must should be. We broadened it so that the State itself may
be recalled that when this proposal was first made to the adopt unemployment insurance providing for pooled funds,
Senate Finance Committee it gave much more power to separate accounts, or a combination of these plans.
ofmcials in Washington, so far as pensions Vere concernt4. Mr. LONG. Mr. President, I want to say to the Senator~
The authorities here were to pass on State plans with respect that If the board should decide that the States are dis­
to amount of pensions, who should get pensions, and so criminating among the people to whom they are giving
forth. They were, in many, respects, to pass on standards of Pensions, if the board should decide the States are giving to
my State, such as those specifying who Is a needy individual the nonneedy and leaving out the needy, it the board rshould.
 9524 CONGRESSIONAL RECORD-SENATE JUNE 18
decide that any of the sections of the bill are not being system. The employer cannot contribute less than he would
carried out in spirit or in letter, the board could cut off any contribute if he were under the Government system.
State if it should want to cut it off. A blind man can see Mr. WAGNER. But the employer will say that he will
that if he knows what has happened in similar cases. He not employ older men. He does not want the problem of
would know they could cut off whom they wanted to. The having to pay his employees more than they have actually
facts are always there, as F'rederick the Great had them, as earned. It is very clear to me, although I may not have
I1was telling, and there are always professors in universities made it very clear to the Senator from MissouriL
to explain the reason they have for cutting them off. Mir. CLARK. The Senator certainly has not.
Mr. HARRISON. Mr. President, I think I have said all I Mr. CONNALLY. Mr. President-­
desire to say. The PRESIDING OFFICER. Does the Senator from New
Mr. WAGNER. Mr. President, I do not desire to extend York yield to the Senator from Texas?
this discussion unduly. I only wish to call the attention of Mr. WAGNER. I yield.
the Senate to a few considerations that make me very appre- Mr. CONNALLY. I suppose it has already been pointed
hensive about the pending amendment. One of our great out, but the chief objection to the amendment is that it
industrial problems-and I think most Senators who have will interfere with any wide-spread general plan. All the
given any thought to the subject realize it-has been the prosperous businesses will build up their own little plSan
preservation of employment opportunities for older men, thinking they can save money by it. and there will be left
men above 40 years of age. We have heard time and time only the little wabbling, crippled corporations to participate
again that industry refuses to employ these men. In spite of in the Government plan. It seems to me the plan ought to
what the Senator from Missouri [Mr. CLARK] said, surveys be universal in its application.
which have been made time after time show that private Mr. WAGNER. That Is the only. way to make it work
pension Plans tend to discourage the employment of older successfully.
men. Mr. CONNALLY. If we have the same standard through­
The bill now pending would do away with the Incentive out all industry, then no one will have any advantage over
to get rid of the older workers, because the contributions anybody else in industry.
of the employer and the employee will be the same whether Mr. WAGNER. That is the idea of any pooling system.
the man employed Is 55 years of age or 30. There will be Mr. CLARK. Mr. President, will the Senator yield fur­
no financial advantage to be derived merely by the employ-. ther?
ment of younger men. Mrt. WAGNER. I yield.
To show that there has been discrimination in the past Mr. CLARK. The same rule would apply under section
I cite the fact, that of all the employees who have been 909, where provision is made for a lesser tax based on
entitled to draw pensions from industry under voluntary experience.
pension systems, only 4 percent of them are actually draw- Mr. WAGNER. That may be. but there is no question of a
ing any benefits. Men are rarely employed until they reach national Pooling system there. Each State has its own sys­
the age where they would be entitled to a pensi'nn. The tem. Under the bill it may be a pooling system, or It may
amendment of the Senator from Missouri would tend to not be A State may enact a law permitting private Indus­
perpetuate this evil. It would create an incentive to the tries' to carry, their own unemployment insurance funds.
discharge of older workers that many employers could not That has no bearing here.
resist. Mr. GEORGE. Mr. President, may I ask the Senator a
Mr. CLARK. Mr. President, will the Senator yield? question?
Mr. WAGNER. I yield. Mr. WAGNER. I yield to the Senator from Georgia.
Mr. CLARK. Will the Senator be kind enough to explain Mr. GEORGE. If it is Absolutely necessary to have a uini­
wherein that danger lies? form and universal system, why is it the Senator has ex­
Mr. WAGNER. Yes; I shall try to do so. Under the bill cepted some existing systems?
as now drawn the older men of today will receive an annuity Mr. WAGNER. I meant universal within a class.
which its greater than they will have actually earned. The Mr. GEORGE. Why so? Why say "1class "?2
theory is that the younger men and the employees who are Mr. WAGNER. We must have a pooling system, Insofar
contributing to the fund will make up that difference by as those with whom we deal are concerned. We need not
contributing over a longer period of time: otherwise the sys- include in the pool classes excluded from the bill.
tem would, of course, become bankrupt. Mr. GEORGE. The chairman of the committee stated a
Industries are going to try to make this plan as inexpensive little while ago that the national banking system, which had
to themselves as possible. If they employ older men, they its own pension plan, would be under the Government sys­
will have to use part of the funds contributed by the younger tem, while the State banking system, which is not under
men to pay the annuities to the older men. The chances control of the Federal Government, would be outside the
are that the employer himself will have to make up a substan- Government plan.
tial part of the difference. Mr. WAGNER. A number of States have pooling systems
Mr. CLARK. Mr. President. will the Senator yield fur- for workmen's compensation. The State of Washington has
ther? one that has been sustained by the Supreme Court, the Court
The PRESIDINir OFFICER. Does the Senator from New saying that some of the better and more prosperous em-
York yield further Lo the Senator from Missouri? Ployers could be compelled to bear part of the cost of those
Mr. WAGNER. I yield. who had a more unfavorable experience. That Is the whole
Mr. CLARK. If under the amendment the employer is re- theory of a pooling system. Any actuary, I am sure, would
quired to pay into the private fund not less than the amount be able to persuade the Senator that it would pay an employer
of the taxes he would have to pay if he were paying into the operating a private pension system to eliminate entirely the
Government fund, where can there be any advantage in the risks arising from employing the older men.
way the Senator has indicated? Mr. LONG. Mr. President, will the Senator yield?
Mr. WAGNER. If he has a greater number of older men Mr. WAGNER. I yield.
than of younger men, his fund is bound to become bankrupt; Mr. LONG. We have not outlawed it In this bill, and that
because, as I said, when the older man of today retires he is the point which the Senator from Georgia and the Senator
will get an annuity far larger than he has actually earned. from Missouri were making.
Somebody has to make up that difference. If there Is a Mr. WAGNER. The Senator was talking about another
large pooling system, however, to which the younger men matter altogether. He was talking about unemployment in­
and the employers throughout the Country contribute, there surance. We do not attemapt to deal with that on a national
will be ample funds to make up the difference, scale. Each State will be free to determine under what sys­
Mr. CLARK. Under the amendment the employee cannot temn it desires to pay unemployment Insurance. That has no
Possibly get less than he would get under the Government connection herm
 1935 CONGRESSIONAL RECORD-SENATE 9525
There Is another consideration that we have not said very Inspections and follow up these matters? The subsection
much about, and I wish to invite the attention of the Senator provides for that as specifically as the legislative drafting
from Missouri to it. Our country has a tremendous indus- service was able to make It do so.
trial turn-over. Suppose, to be very moderate indeed, that In Mr. WAGNER. I am addressing myself more to the phil­
the industries which adopt this system a million men are the ical impossibility of doing it. I should like to agree with
annua turnver.the Senator on his plan. I know that most of the private
In each individual case when a Job is vacated, either vol- companies wish to be fair to their employees, but, at the
untarily or through discharge, the board would be required same time, they all feel that they owe an obligation to their
to determine what amount should be paid by the employer stockholders, and they are going to conduct these funds with
into the Federal fund on behalf of the particular worker, or as little expense as possible.
if the employee died in service the board would have to Mr. HARRISON. Mr. President-
examine whether his estate received Its full due. Such cir- The PRES1IDING OFFICER. Does the Senator from New
cumstances would require in each instance a separate in- York yield to the Senator from Mississippi?
vestigation. How will it be possible to conduct a million Mr. WAGNER. I do.
investigations per year just to ascertain these facts? It Mr. HARRISON. I was about to ask the Senator a ques­
would certainly be unfair not to investigate them, because tion, but I wished to have the Senator from Missouri hear
some of these plans may be run loosely, and may not afford it in the hope that it might appeal to him.
the individual worker the protection to which he is entitled. This part of the bill is to go into effect in 1937, 2 years
Mr. CLARK. Mr. President- from now. Amn I right in that statement?
The PRESIDING OFFICER. Does the Senator from New Mr. WAGNER. Yes.
York Yield to the Senator from Missouri? Mr. HARRISON. If we could pass the bill In this form
Mr. WAGNER. I do. we should have 2 years in which to study the question of
Mr. CLARK. If any private plan were loosely run, It amending the law and working out the safeguards that
would be directly chargeable to the holy social security might be absolutely needed in the way of supervision, in­
board set up by the Senator himself in this measure, be- spection, and all those things. We could study this par­
cause they are specifically charged with the responsibility of ticular proposal further, and we should have 2 years in
seeing that these plans are not loosely run; and since we which to make the study.
are giving them practically powers of life and death over the Mir. WAGNER. Yes; that may very. well be.
population of the United States anyway, it does not seem to Mr. HARRISON. I hope the Senator from Missouri will
me too much to require that they should see that these acquiesce in taking that course.
private plans are not loosely run. Mr. CLARK. Mr. President, will the Senator yield?
Mr. WAGNER. Even though they may not be loosely run, Mr. WAGNER. I1yield.
certainly the worker should have some assurance that he Is Mr. CLARK. The Senator's argument answers It~self. if
getting all that he is entitled to get. He is not an actuary, the amendment should be accepted, and any hardship were
He is not a mathematician. He is just a plain vorker. He to develop, it would always be possible to amend the act and
does not know whether or not he is getting the proper sum, cut out the exemption. The Senator's proposal is to wipe out
and he is entitled to Government protection, these private pension systems, and then, if we find that we
We had a persuasive experience upon an analogous mat- have done a wrong, to try to cure the wrong by amendment.
ter in New York State. For a period of time after the Mr. WAGNER. I know the Senator will not agree with me
workmen's compensation law was enacted-and I was largely on that point; but I am fairly convinced that if this amend­
responsible for the liberal provisions of that law-we per- mnent were adopted we should find the Government holding
mitted insurance companies to make private settlements the bag for the older men who are entitled-to consideration.
with workers when they were injured. We thought that no while the industries would take care only of the younger men
abuses would occur, and that a proper determination would who earned every bit of annuity they received. That is the
be made of the injury which a man received and of the danger; and in connection with this very remarkable step
amount of compensation to which he was entitled under forward in taking care of the aged members of the comn­
the law. But very soon abuses came to the attention of the mw~ity, I do not think we ought to risk, even in the slightest
authorities. Officials and investigators themselves were fre- degree, an amendment of thi~s character.
quently at fault. Wanting to make good records, they paid, Mr. CLARK. Mr. President, will the Senator yield one
for the loss of a leg, perhaps, the price of ti'e loss of a moment more?
finger. The poor worker did not know the difference. He Mr. WAGNER. Yes.
did not know what he was entitled to, so he signed a re- Mr. CLARK. A while ago I referred to the plan in
lease. The system was in existence for only about a year in the Socony-Vacutum Co.. which gives to its employeeseffect cer­
when the nbuses were called to the attention of the legisla- tain very outstanding advantages above the Government
ture, and we changed the law so that the approval of the plan. I am Just in receipt of a telegram from Mr. Guth, of
authorities must be had in each case before payment was the Socony-Vacuum Co., which it seems to me answers the
permitted to be made. Senator's argument. He says:
These millions of workers, when they leave one employ- The average age of our company's 42.000 employees In the United
nient and go into another, are entitled to protection, and states...
where can enough inspectors be obtained to make Investi­
gations and report every case? I think that, as a pure mat- Who receive these benefits, voluntarily given-
ter of administration, the amendment of the Senator from Is over 40.
Missouri is an impossibility. Mr. WAGNER. Yes; they have a particularly good record.
Besides, of course, as the Senator from Mississippi f Mr. There is no doubt about that. There are some companies
HARRIsox] has pointed out, there would be no public con- which undoubtedly would administer this privilege In a way
trol over the administration of the private funds of comn- that would be of great advantage to the worker. The diffi­
panies. A man could not be sent in every week or every culty Is that we Cannot make exceptions that would let In &
month to make an investigation as to how the funds were lot of abuses. The Senator happened to mention one comn­
being administered. I do not say that there would be so pany which has had an excellent system: but there are many
very, many abuses; but the worker must be protected in every bad ones. In addition, this bill does not abolish any system.
case. If any employer desires to give to his employees an advantage
Mr. CLARK. Mr. President, will the Senator yield? in addition to that which is given under this bill, he is at-
Mr. WAGNER. I yield to the Senator from Missouri. liberty to do so. He can supplement our efforts; and let me
39r. CLARK. How does, the Senator construe subsection say that I am sure-that the company whose name the Sena-.
(c) on page 3 If he says the board bas no right to mnak tor has just read wWl do so--and many other companies wil
IL%=--4O1
 9526 CONGRESSIONAL RECORD-SENATE JUNE 18
Mr. CLARK. The Senator means to say, if he will Permit the notes. That act went to the Court, and the argument
me, that a company may have two systems going at the same was made: "1This measure is really not a taxing measure.
time if it desires. In other words, they axe not permitted to The purpose of it is to drive the notes out of circulation.
have one system which will grant to the employees very dis- The Court said: " It Is a proper exercise of the taxing power
tinct advantages, but they must go to the trouble of having of Congress, and if it serves some other purpose, that does
two separate and distinct systems. not affect its constitutionality."
Mr. WAGNER. I have given the reasons why I think the The same thing is true of the Narcotic Act. That act
amendment is dangerous. I am apprehensive of its effect was passed not so very long ago. in the form of a tax
upon this legislation; and the experts-who, after all, have measure, but other purposes were tied in with it, amongr
given study and thought to this subject for a long while-all them a health purpose. The act was attacked upon the
agree that this amendment is devastating to the object of the ground that the tax was a mere pretext. The Court de­
legislation. clined to consider that objection, and said:
I do not wish to make a long constitutional argument An act may not be declared unconstitutional because its effect
upon this question, because apparently I talked to deaf ears may be to accomplish another purpose Aswell an the raising of
the other day. I tried, in my introductory address in the revenue.
Senate, to cover the question and to advance the reasons Then there is the oleomargarine case. And while the
why I believe that the measure is constitutional. Of course. question has not yet been passed upon by the Supreme Court,
as the Senator from Mississippi has said, all these matters the circuit courts of appeals have upheld the processing tax.
ultimately will be determined by the United States Supreme although the act embodying it concededly has objectives
Court, and we can only base our predictions upon what the other than the levying of a tax,
Court heretofore has done. The final question which the Senator from Georgia has
The first question raised by the Senator from Georgia raised is that we are only calling upon a certain class of our
was whether the legislation embodies a public purpose. I citizens to pay the. tax, which goes Into the Federal Treasury,
thought we had reached the stage where we accepted this and in time will be used in part to finaince the payment of
as a legal truism; that the prevention of destitution in old pensions.
age and taking care of our old people who have spent their I think that is afairclassification. I tbink it can be Justi­
lifetimes in creating the wealth of the country, are cer- fled easily, because the employer gets a special benefit from
tainly public purposes. We have so recognized by prior the pension law. Of course, the public generally is bene­
legislative acts. We have made appropriations to take care fited by the prevention of destitution; but specifically the
of many people, not only the old, but also the young who employer is benefited, because It is now a recognized fact
are on the point of starvation, that more security to the worker improves his efficiency.
Mr. GEORGE. Mr. President, I am not quarreling with In New York State we had experience along that line after
that.the workmen's compensation law was enacted. A survey was
Mr. undrstod
AGNR. hatthe enaor as. made 3 or 4 years later: and it was shown that, excluding the
Mr. GEORGE. Oh, no; I am not. I do not see how the question of new labor-saving machinery, the, productivity per.
Senator could have misunderstood my statement. worker actually increased, although at the same time hours
Mr. WAGNER. The Senator did say, as he will see If he were shortened. As I have said, experience has very defi­
will look back in the RECORD, that there is a question as to nitely shown, and I do not think anyone will contradict me
whether this bill embraces a public purpose. on this, that in affording the employee better conditions of
Mr. GEORGE. Yes. life, better sanitary conditions, and security in old age, the
Mr. WAGNER. And I asked the Senator a question employer makes a happy and contented worker and thus
about some of the State pension laws, which certainly are increases his productivity. Therefore, it seems to me that.
based upon the theory of a public purpose. the classification is perfectly fair, since employers will get
Mr. GEORGE. It Is one thing to care for the aged and benefits greater than the benefits which the common run of
the infirm out of general appropriations. It is one thing ctzn ilrcie
to provide general relief. It Is quite 9, different thing, when cIthizns wille areeivhe. qetoswihth eao asd
we have! a specific bill which, In my judgment, may be open I know the Senator did not contend that the proposed act
to that attack, from saying that Congress has not general would be unconstitutional; he merely Indicated his grave
power for that purpose, doubts about It. On the contrary, I feel very confident that
Mr. WAGNER. Then there is still a doubt in the Sena- the proposed legislation will run the gantlet of the courts:
tor's mind as to whether our classification is rational and and of course It has the approval of the overwhelming senti­
not arbitrary. Time and time again Congress has made mn ftecuty
classifications, and so long as they have been reasonable, mn ftecuty
the courts have never interfered. In many States laws Mr. TYDINGS. Mr. President, I do not wish to say any­
which have been upheld by the courts have provided that thing about the merits of the bill or to discuss Its con­
no pension shall be paid until one is 65 years of age. That stitutionality, but I rise to support the amendment offered
discriminates against younger men who, perhaps, would like by the Senator from Missouri [Mr. CLARE]. About 2 weeks
to retire; but it is a classification which is fair and reason- ago0 I offered a similar amendment, which the committee
able, considered. I am advised by the members of the committee
I am E ire we all agree that one of the fundamental pur- that they were very sympathetic to the exemption contained
poses of government is to give security to its people; and I in the amendment of the Senator from Missouri, as well as
do not think any greater contribution could be made to the amendment proposed by me.
the happiness of our people than to give them security in Mr. CLAIR.K. Mr. President, will the Senator yield?
old age. So I think that, so far as the question of a public Mr. TYDINGS. I yield.
Purpose Is concerned, there will not be much dispute. Mr. CLARK. I stated a while ago, during the absence of
The second question which the Senator from Georgia has the Senator, that my amendment was lost only on a tie
raised is that the taxing power is here used Indirectly to vote when there was a very- slim attendance of the cor­
Provide a social advantage or a pension for a certain clas mittee, when a quorum of the committee was not actually
of persons. presqnt; in other words, lost on a vote of 5 to 5 In the
It Is argued that we cannot use the taxing power for committee. There were a great many more experts Present
these other purposes. Unfortunately for the argument, the than members of the committee.
courts say that we can. Long ago, when Congress passed Mr. TYDINGS. I understand those who voted against
a law taxing State bank notes, not only the ostensible the amendment voted in that way because they thought
reason but the conceded reason for the legislation was to that with the exemption In the bill it would make the bill
drive them out of circulation. As a matter of fact, I do not unconstitultional.
think a dollar was ever collected under the Imposition of 3Iwish to speak primarily of the merits of the amendment
that tax, but It did accomplish the purpose of destroying offered by the Senator from Missouri. Long before this
1935 CONGRESSIONAL RECORD-SENATE 9527
matter Was agitated by the States or by the National Glov- them. Their reserves would have been liquidated, and. con­
ermient, some forward-looking concerns, having the in- cerns would have been disorganized, insofar. as the insurance
terests of the workingman at heart, and realizing that a features were concerned, and we would have many people.
contented worker was a good investment, set up Insurance perhaps, on the relief rolls, whereas if we had made this
plans, Particularly old-age and retirement plans. exemption the companies themselves could have taken charge
In my State there are any number of such plans which of them.
are working efficiently. The United Railways, in Baltimore I do not believe the Federal Goyernment ought to dis­
City, having about 4,000 employees, has such a system, and courage legitimate business in trying to cooperate with labor
I have learned from the lips of the employees themselves for the best interests of labor in Providing a retirement fund
that it works splendidly, and they would prefer, at least for when the laborer shall have reached the age of 65 years and
the Present, to have the company insurance feature retained, has rendered efficient service.
rather than to have -a Federal law enacted. Probably later Mr. CONNALLY. Mr. President, will the Senator yield?
on if the national law turns out as Its authors think it will, Mr. TYDINGS. I yield.
they may want to abandon their own scheme and come in Mr. CONNALLY. Would not the argument of the Sena­
under the national scheme, but for the time being they have tor be met, however, by limiting this amendment to systems
confidence in the insurance plan set up by the United Rail- already in existence? The amendment of the Senator from
ways of Baltimore. There are a number of other plants, Missouri invites the establishment of new systems for the
employing thousands of people, which have similar old-age- purpose of avoiding the requirements of the Federal plan.
retirement set-ups to take care of those who would be taken Mr. TYDINGS. I personally should like to see the ex­
care of by the Federal Government under the proposed law. emption as the Senator from Missouri has it in his amend­
As a matter of policy, is it wise to wipe out in one fell ment; but I should be satisfied, I may say to the Senator
swoop these successful insurance set-ups, and substitute one from Texas, if the amendment were restricted to apply only
that is only on trial, to say the least? Would it not be to concerns now having such systems in existence.
better to exempt them for the time being, and then, if we Mr. CONNALLY. After the establishment of the Federal
find the Government plan to be a success, as everyone hopes system there is no reason why everybody should not come in,
it will be, to legislate again later on? That is what the except for the temptation to devise a system by which
employees In the concerns themselves want, and I can see no employers might think they could save money.
harm, certainly at this Juncture, in making an exemption in Mr. TYDINGS. If the Senator from Missouri were to re­
this case, so that where there is contentment, and where strict his amendment, I should not object to it at all. My
the employee finds that he Is protected against the vicissi- concern at this time is bottomed primarily on the fact that
tudes of old age to his own satisfaction, that scheme may where these agencies are already in existence, and they are
be kept in existence until the proposed plan can demon- doing as good a Job as the Federal Government expects to
strate its good fruits, do, or in some cases a better job, and it is desired that they
Mr. President, that is basically what the amendment off remain in existence until the Federal law can be promulgated
the Senator from Missouri would do. It would not change and proven, they are well within their rights in saying, " We
the philosophy of the bill. It provides only that where, did this 25 or 30 years before the proposal ever came to
after a review, It is felt that the agency in the private sys- Congress; our plan is a success; it is as good as the plan.
tem is comparable with the set-up proposed on the part of which the Federal Government itself intends to set up, or
the Federal Government, it shall receive a certificate of ex- better, and we ask only that for the time being we be given
emption from the provisions of the proposed act. What an exemption."
harm could be done.? As I understand, the agency certified What tarm can be done by giving such an exemption?
must be as good as the agency proposed to be set up by the The private agency must be doing as good a Job as the Gov­
Federal Government in order to get the exemption certifi- ermient expects to do in order to get its exemption certifi­
cate. It may be better. cate. If the private system were inferior to that which the
Some of these annuity systems have been built up for 25 Federal Government would set up, it would be a different
or 30 years. Fortunately, where physical examination is proposition; but where they are already carrying out not
an incident to employment, and where there is little drain only the intent but the substance of the law, and have been
on the fund, the amount of money built up in reserve far doing so for 25 or 30 years. and when we have been urging
exceeds that which would be built up In the ordinary run employers to do this very thing, it strikes me it would be
of labor employment. Therefore, what earthly harm can discouraging to industry and to employees alike to have that
there be, until the proposed act shall have been tried out, effort wiped out in one fell swoop.
In letting the concerns to which I have referred, which are Mr. CLARK. Mr. President, will the Senator yield?
already doing what the Federal Government would do, re- Mr. TYDINGS. I yield.-
tain their own systems, until the Federal system shall have Mr. CLARK. I should like to invite the attention of the
been promulgated and placed in full operation? Senator from Maryland. and the Senate, to the fact that
If it turns out that private systems of any business organi- the Federal Government itself is exempted under the pro­
zations are falling below the standard which the Govern- visions of this bill. It is the largest employer In the coun­
ment wants established, we can legislate at a later date and try, and it Is exempted. I should blush, I am sure every
say, "1You are not doing as well as the Federal Government Member of the Senate would blush, if he thought the Fed­
is requiring other concerns to do, and therefore we will have eral Government was requiring from industry or from other
to legislate you out of business." employers advantages which it was not willing to grant to its
Certainly at this Juncture, when the plans referred to are own employees. The Federal Government Is exempting itself
the only voluntary old-age-insurance schemes in existence; under the operations of this bill for the reason that we
and since they are satisfactory to both- employer and em- have already in effect a better retirement and aknnuity plan
ployee, it seems to me that the weight of logic Is that for tlhan is provided in this bill for general labor.
the present we should make an exemption; and If subsequent Certain religious bodies, notably the Presbyterian Church,
events prove It to be unwise we can correct it. are exempted under the provisions of this bill by reason of
Let us consider the other alternative. Suppose we do not the fact--and it can be the only reason-that they already
allow this exemption; suppose we wipe out all these bene- have In effect a much more liberal and more meritorious
fits; all these annuity funds which have been created; and plan.
we find that our scheme is not working as well as the private If the Federal Government, the Presbyterian Church, and
schemes are working at this moment; that for some unex- other religious bodies are to be exempted, why should not
pected-reason the lack of taxes, a new depression. or for any other employers who desire to do the same thing be ex­
other reason the Federal scheme becomes impracticable. empted?
We would have wiped OUL all the insurance systems in the Mr. TYDINGS. In my Judgment, the Senator's argument
meantime, and we could not go back then and reestablish Is unanswerable.
9528 CONGRESSIONAL RECORD--SENATE JUNE 18
Mvr. BARKLEY. Mr. President, will the senator yield? What Is the title of the act?­
Mr. TYDINs. I yield. An act to provide for the general welfare by establisbing a
Mr. BARELEY. Of course, the object of this bill is to system of Federal old-age benefit&­
levy the tax on organizations which are set up for prolit. And so forth. That ought to apply to the preachers the
The Presbyterian Church or any other organization under same as to anybody else. I am sure the Senator from Ken­
it is not a profit-making institution, and, therefore, the tucky does not desire to have the ministers left out of this
Government does not desire to tax it in order that It may system.
set up a fund of this sort. It. would be utterly inconsistent Mr. BAKLY No.
for the Government of the United States to tax itself lin Mr. TYDINGS. I agree with him that we cannot tax the
order to raise funds in a way similar to the way the tax is congregation to make its particular contribution to this
levied on private industry. It is not a question of whether fund; but indirectly we tax the congregation, because it
there has already been established a retirement system consumes the things which all the concerns covered by this
which is better than the one we are setting up for private bill make; and, therefore, if we tax them, the congregation
industry, or whether the Federal Government plan will be bears the indirect if not the direct tax,
better than a plan which some private institution or agency Mr. BARKLEY. Mr. President, my contention is that
already has in operation, whenever we shall establish an old-age-pension system for
It seems to me there would be no logic in undertaking to everybody we will have to pay for it by general taxation.
put the Federal Goverrnment, or a church, or even a State, We cannot levy a tax on the Ford Motor Co. to pay old-age
which is a political division of the Nation, on the same basis pensions to its own employees and also to the Presbyterian
as that on which we would put a corporation which is preacher and the school teacher. We cannot levy'an em-
employing men, out of whom it makes a profit. It seems to ployer's tax on the Baldwin Locomotive Works in order to
me t~'ere is no analogy between those situations, pension somebody who does not work for the Baldwin Loco­
Mr. TYDINGS. Aft. President, I do not altogether agree motive Works. So whenever we decide to pension everybody
with the Senator from Kentucky. The. purpose of the bill, who Is over 65 years of age we must levy a general tax on
as I understand, is to declare a new policy, in this Nation; everybody, subject to tax.
namely, that when people arrive at the age of 65 years they Mr. TYDINGS. Mr. President, I will answer that state­
shall have, in effect, the right to retire. It does not make ment in a moment. Now I yield to the Senator from Loulsi­
any difference whether they are preachers, or doctors in a ana.
hospital, or workers in a steel mill, or conductors on the Mr. LONG. Mr. President, has the Senator from Mary­
street cars. If our general policy Is to take people off the land any figures showing how much is being paid in pensions
work list when they have arrived at 65 years of age there is under the private employers' system?
no earthiy reason why the Federal Government or the Pres- Mr. TYDINGS. I did have some figures. I do not know
byterian Church or any other body should have an exemp- how accurate they were. I do not have them available.
tion, unless every other concern which is already providing Perhaps the Senator from Missouri has them.
age retirement should have an equal right, particularly when Mr. LONG. Has the Senator from New York such figures?
it is maintaining a better system or pays more than is pro- Mr. WAGNER. I have not the figures, but I will say, that
posed to be paid by the Federal Government. there are only 2,000.000 employees under pension systems
Mr. BARKLEY and Mr. LONG rose. toay.
The PRESIDING OFFICER. Does the Senator from Mr. TYDINGS. I am surprised there are so many.
Maryland yield; and if so, to whom? Mr. LONG. If there are 2.000.000 persons under pension
Mr. TYDINGS. I first yield to the Senator from Kentucky. systems today, I will say that that is more than will be ac­
Then I will yield to the Senator from Louisiana, commodated under the proposed act.
Mr. BARKLEY. Mr. President, if we were establishing a Mr. TYDINGS. Wr. President, according to the 1930 cen­
general old-age-pension system applicable to all when they sus there are 48,000,000 people of working age in this country.
reach a certain age, of course we should have to provide the Prom that number we must eliminate, first of all, many
moncy- out of general taxation. We could not tax a church, millions engaged in agriculture.
we could not tax the Federal Governmnent. because neither We also must eliminate those who are engaged In trans­
has anything upon which to levy a tax. If we are ever to portation, particularly on the railroads, almost all of which
embark upon a general old-age-pensicn system applicable to have a pension system. We also must eliminate most of those
everybody, we may have to abolish any special taxes to raise who work in the steel mills. When we add all the municipal
funds on the part of employers, and pay the pensions out of and State employees who are under merit systems- and re­
money in the Treasury raised by general taxation. tirement acts. I shall be very much surprised if the number
However, this bill does not contemplate any such step as does not far exceed the 2,000.000 which the Senator from
that, though it may come some day; but it has been felt that New York gives.
this is as far as we can go now in undertaking to make Mr. WAGNER. Will the Senator yield?
employees and employers contribute to a fund for old-age Mr. TYDINGS. I yield.
pensions. Mr. WAGNER. Of course, I did not Include publlc em­
Mr. TYDINGS. I see the point of the Senator from Ken- ployees.
tucky; and, as I have said, I do not wholly disagree with Mr. TYDINGS. But the Senator must concede that th~
him. I think, however, the Senator from Kentucky will be 48,000,000 also includes those who work for the Government,
fair enough to say that the main purpose of the bill is not to so if he is going to state one part of the proposition for one
levy a tax on anybody. The main purpose of the bill is to purpose he ought to state the other part of the proposition
provide retirement for people who have reached the age when for the other purpose.
they can no longer work. If that is the case, there is no Mr. LONG. Mr. President-­
reasort why anybody Should be exempted; and if exemptions The PRESIDING OFFICER (Mr. POPE in the chair). Does
are to be made for the Government, or for the Presbyterian the Senator from Maryland yield to the Senator from Louisi­
Church, or for ani organization which has provided its own ann?
retirement agency, then it strikes me that concerns which Mr. TYDINGS. I yield.
have provided retirement agencies comparable or superior to Mr. LONG. I will put what I wish to present. in the form
that which is envisaged by the bill should receive an ex- of a question. If we had what we knew was a compensatory
emPtio'l, at least temporarily, until the fruits of the bill can pension system which actually covered all persons beyond a
be teste in the light of experience, certain age when they should retire from labor, that would
Mr. LO3NG rose, be one thing; but we know that this bill Is necessarily con­
Mr. TYDINGS. I desire to make further answer to the fined by reason of the amount of money involved, if by no
Senator from Kentucky before I yield to the Senator from other reason, to a very small number of those who reach that
Lpolisiana, age; and we are about to destroy the private system. I con­
 1935 CONGRESSIONAL RECORDL-SENATE 9529
cede the private system to have some faults: but nonethe- Mr. BARKLEY. Mr. President~­
less, with a far more faulty system we are about to destroy The PESEDING OFFICE. D~oes the Senator from
a system which is taking care of a far greater number of peo- Maryland yield to the Senator from Kentucky?
pie on a pension roll. Not only that, but I may add to the Mr. TYDINGS. I yield.
Senator from Maryland that this bill prescribes that only the Mr. BARKLEY. Those concerns which now have their
needy, the paupers, may get a pension, own private system which Is as beneficial to the employee
Mr. TYDINGS. I do not desire the Senator to take too as would be the system we are proposing to set up will lose
Much Of my time. nothing by going into the Federal system, for it would cost
Mr. WAGNER. I think the Senator from Louisiana is them no more, if they are already paying Into such a fund.
mistaken in the statement he has Just made. So they will not be harmed by being required to go In. If
Mir. LONG. The Senator is talking about unemployment they have a system that is better than the proposed Gov­
insurance? errinent system, then they can go into this system and still
Mr. TYDINGS. Yes. supplement their old system by whatever excess of good they
Mr. WAGNER. Yes: that is correct, are now engaged in doing toward their employees. So they
Mr. LONG. I was talking about pensions, will not be hurt.
Mr. TYDINGS. Let us take the argument made by the Mr. TYDINGS. That is a fair concession from the Sen­
Senator from Kentucky in regard to the Presbyterian minis- ator from Kentucky.
ters. The Senator from Kentucky very properly says that Mr. BARKLEY. I am always fair.
the Congregation or the employers, so to speak, do not pay Mr. TYDINGS. The Senator said inferentalaly that where
any tax into this fund, and, therefore, the preacher who the system which is now in existence under private concerns
has retired should not receive any of the benefits out of this is better than that which the Federal Government attempts
fund, and therefore that it is a proper exemption, to set up he hopes they will go ahead with It, but he is un­
BY direct analogy, does not that apply to the company willing to give them any exemption to go ahead with a plan
which is exempted? It receives no benefits from this fund, which is better than the Federal Government's plan.
It pays into its own fund, and, therefore, why should it not Mr. BARKLEY. I do not know that there are any such
be exempted? It does not cost the Government a 5-cent concerns; I am assuming that there may be.
piece to maintain insurance agencies which are now in Mr. TYDINGS. I can tell the Senator that there are.
existence; and if they provide their own funds and pay Mr. BARKLEY. If there are, there is nothing in this
their own benefits, why should they pay into a Federal proposed law that will prevent them from going ahead with
fund? their unusual generosity toward their employees.
Mr. BARKLEY. Mr. President, will the Senator from Mr. TYDINGS. The bill provides, we will say, $30-a­
Maryland yield? month old-age retirement pensions. In Baltimore the
Mr. TYDINGS. I yield. United7 Railways, I think, pay their men $50-a-month retire­
Mr. BAJRKLEY. We are dealing now with private corpora- ment pay; yet that is to be wiped out. In other words,6
tions engaged in the employment of men for profit. I do not those men who have looked forward all their lives to getting
believe we can have a successful national pension system $50 a month when they are retired are to be cut down to $30
while at the same time exempting those who may set up their a month; and yet this bill Is in the interest of labor.
own system and who may be subject to high-pressure sales- Mr. BARKLEY. The Senator will concede that there Is
manship on the part of agents of annuity or insurance com- nothing in this bill that prevents such a concern from sup­
panics coming around and telling them that they can estab- plementing this tax so as to make it $50 a month?
lish their own system and save money over and above what Mr. TYDINGS. If we are going to give them the right to
they would pay into the Federal Government. I think ulti- do it anyhow, in a supplementary form, why not let the
mately it would tend to break down the national system, for system which is better than the proposed Government sys­
the only prospect of success in this national system is that it tem stay?
shall be universal. If it is going to have any competition in Mr. BARKLEY. Because we cannot have a successful
the field on the part of private annuity companies and insur- patchwork system; it has got to be universal and uniform
ance companies, it will be a failure to that extent, in order to be successful.
Mr. TYDINGS. Basically the Senator from Kentucky and Mr. TYDINGS. I do not think it has got to he '1uniform"
I are not far apart. What we think is the direct purpose of The Senator's own words belie that, I think, because he
the bill, in effect, is to compel every employer in the country says if the system now in existence is better than the one to
who employs more than 10 men- be provided by the Federal Government he hopes there will
Mr. BARKLEY. As the bill now reads, more than four be supplemental action; so it will not he uniform.
men. Mr. BARKLEY. The Senator cannot take advantage of a
Mr. TYDINGS. Very well; more than four men. The mere expression. What I was talking about was uniformity
direct purpose is to compel such employer to enter into a Sys- in the minimum requirement of the Federal statute as to the
tem of retirement insurance whereby his employees will Federal system. Any concern which desires to go beyond that
receive the benefit of it when they reach a certain age. The may do it; any concern, which desires to continue its present
modus operandi in that case is by taxes, but the purpose is to system may do it in full. It might not want to do it, and., I
compel them all to insure their workingmen. I am not quar- dare say, would not want to do it, but it may do it if it
reling with that; but the way to compel them to do that is wants to.
by taxing them, taking the money and putting it into the Mr. TYDINGS. I am going to make a suggestion to the
system, whether they want it or not. If they are already Senator from Kentucky and to others who may do me the
doing that, if they are already paying benefits either equal or honor to listen to me. My prediction is-and mark this well,
superior to those set up by the bill, then why should not the Senators-that if the exemption is not granted, if individual
Government let them alone, for they are already doing what concerns do not have the right to set up their own insurance
the Federal Government through its taxing power is trying systems, if they are compelled to conform to the letter and
to make the other concerns do that have not heretofore spirit of this proposed national law, what will happen will be
done it. that they will liquidate their present insurance systems, go
Mr. BARKLEY. Mr. President- under the Federal law, and the workers will get less money
Mr. TYDINGS. I shall yield to the Senator in juct a than they would get if the exemption were granted. 72.
moment. I submit to the Senator from Kentucky that if concerns having private systems will say,"1 That is the Federal
every employer employing more than four people now had standard; we have lived up to the Federal standard, and
this kind of insurance system, this bill would not be here, therefore, gentlemen, although we did have a system, the
The only reason this bill is here is that most concerns have Federal law has wiped it out; we feel we have done our part.
not set up such a system uf insurance, and this is an attempt we told the Congress that we would like an exemption, but
by the taxing Power to compel them to set up that sort of the Federal Congress did not care to grant it to us even
a systeii. though our system was better tha that the Federal CongreMs
 9530 CONGRESSIONAL RECORD-SENATE JUNEC 18
had in mind; and now that they have wiped out our own Mr. TYDINGS. The Carnegie Institute was a charitable
agencies, we will Just go along with the Federal agency." institution, pure and simple.
Mr. BARKLEY. Mr. President, will the Senator yield Mr. SHIPSTEAD. Mr. President-
there? Mr. TYDINGS. Just a moment. The Federal Government
Mr. TYDINGS. Yes; I yield. had not any say in the world over Mr. Carnegie's fund, but
Mr. BARKL~EY. Where there is 1 private Institution under this amendment the industrial concern would only be
which is providing a better system than this bill would pro- exempted if its plan in operation was equivalent to or better
vide there are 400 which are not providing systems that do than that to be provided by the Federal Government. So
as well. that the power of supervision, the right to take away their
Mr. TYDINqGS. AU this amendment seeks to do Is to ex- exemption certificates and compel -them to do this or that
empt those that are doing as well or doing better than the or the other thing -in order to retain their exemption certifi­
bill requires that they shall all do; and what reason there cates, would always lodge in the Federal board. So the Sen-.
can be for failing to grant an exemption in such a case I ator's analogy, in my judgment, is not an accurate one.
do not know. Mr. SHIPSTEAD. Mr. President, may I ask the Senator
Mr. BARKLEY. Mr. President, will the Senator yield another question?
there? Mr. TYDINGS. I yield.
Mr. TYDINGS. Yes; I yield. Mr. SHIPSTEAD. Does not the Senator think there should
Mr. BARKLEY. The Senator has very consistently urged be some supervision over private institutions, if they are to
for many years his opposition to an army of Federal in- be exempted from the provisions of the bill, So the fund
spectors going out all over the country, would be protected from dissipation and investment in worth­
Mr. TYDINGS. The Senator is correct as to that. less securities?
Mr. BARKLEY. But if we exempt all these private con- Wr. TYDINGS. I have no objection to that; in fact, I
cerns, it will take another army of Federal inspectors, going would encourage it. I should like to see the funds invested
all the time, to ascertain whether they are living up to the in the strongest and safest possible way. In many States,
standard, including my own, such funds can be invested only in that
Mr. TYDINGS. I approach this matter with the positive kind of security which is approved by the court; and under
view that if we are going to establish a uniform law, and that plan there has been little or no loss, because the court
wipe out all private initiative, we shall be laying the founda- will only approve National or State bonds, or city or county
ticn of real bureaucracy. So long as we leave the door open bonds which are in good standing. I suppose that system
for private initiative, particularly that which has estab- is in existence in other States so that trust funds can be
lished itself for 25 or 30 years, we encourage the employer invested only in securities approved by the court. I know
to take care of his employees, which he is doing now better in the majority of States of the Union that is the law.
than would be done under the proposed Federal Government. Mr. President, I now return to the question with which I
I predict that this bill Is only the first step on the stairs, opened my remarks. Can there be any harm done to the
and the Members of this Chamber-and I am not taking proposed retirement system if the amendment offered by the
sides on the matter; I am merely making an observation- Senator from Missouri (Mr. CTAR] is accepted? NO; there
will see the day, particularly if there are no exemptions cannot be. because in order to be excepted or exempted the
granted, when we will have a uniform retirement law for private retirement agency must be equal or superior in its
all th-p workers of this country, regardless of their health, benefits to the agency set up or the standard fixed by the
regart. ess of their salaries, regardless of their savings or Federal Government. The workingman is better off, or at
Income, or anything else, just as certain as that the sun least as well off, under the private insurance agency as he
rises and sets. That will be the first real bureaucracy that would be under the Federal Government.
we will have under this bill. What I am proposing to do is In view of that fact--and when the law Is in its initial
to keep the Federal Governmnent from interfering with pri- stages, when it has not had a chance to operate-what harm
vate organizations which are already doing as well as this can there be in keeping the demonstrated institutions which
bill, if enacted, would compel them all to do. I would rather have proven real strength and real benefit and real con.
see this done voluntarily all over the country than to have sideration for the workingman on the part of those who have
the Federal Goverrnment in it at all, were it possible to have employed him? What harm can there be in giving them a
it done voluntarily, temporary exemption until the fruits of the law may be
I take it for granted that the only reason we have this ascertained? If anyone can show me where the workingmaa
bill before us today is that certi-ln concerns will not Insure will be any worse off, I shall not have another word. to utter.
their employees, and, therefore, the time has come when Thus far no one on this floor has been able to offer a single
Congress desires to compel them to do it; but why should scintilla of evidence to show that the workingman will be any
those concerns which have for 2.'5 or 30 years built up their worse off under this exemption than under the terms of
own insurance agencies, which are doing better than the the bill. On the contrary, it is conceded that In cases he
Plan which this bill proposes to'do, be wiped out? 'Why will be better off under the exemption than if he Is forced
s-hould they not be given an exemption? What harm could to come under the terms of the bill.
it do? If these facts be true, and 1 believe they are true, then
Mr. SHIPSTEAD. Mr. President- why not grant the exemption until we can observe the work­
The PRESIDING OFFICES. The time of the Senator ings of the law for a year or two, and then if we see that
from Maryland has expired on the amendment, it comes up to our expectations, that private systems are nW
Mr. TYDINGS. Very well, I will speak on the bill. longer to be considered In connection with this phase of
Mr. SHIPSTEAD. I believe that Andrew Carnegie was a work in human activity, we can wipe them out. But is it not
good businesn' man. He established a retirement fund for the part of wisdom, and is it not the part of caution, and
college professors. MY information is. that there is very is it not the part of vision to retain something that Is a
little left of that fund, success until we can find out whether the promulgated
If some Particular business institution employing labor measure shall bear the very lovely fruit which its sponsors
exempted from the provisions of this bill should not manage think It will?
and supervise the reserve fund better than has been done That is all the amendment seeks to 'do. It simply Pro­
in the case of the Andrew Carnegie fund and the private vides that where a system is operating and paying benefits
Industrial company's Pension fund should go the way of the equal to those set up in the bin, or better than those pro­
Andrew Carnegie fund, what would happen to those de- vided In the bill, then the board shall grant to such private
Pendent upon it? Undoubtedly the establishment of the agency a certificate of exemption. The board can revoke the
fund was a good thing for Andrew Carnegie; he got a, lot of certificate whenever the private system falls below the
college professors to carry out his Ideas-, but where does it standard, but so long as it Is operating in a fashion equal
leave the Professors. and how does it affect the United or superior to the plan proposed by the bill, it shatll be
Stateo? granted that exehinptlo
1935 CONGRESSIONAL RECORD-SENATE 9531
I have not heard anyone yet offer any objection to the Md., there recently died a man who had been a telegraph
amendment except that we ought to make the system uni- operator. He had worked for the Pennsylvania Railroad for
form, even if making it uniform takes from some working- about 35 or 40 years, I believe. When he retired he received
man some benefits, which he would have if the exemption a pension of something over $50 a month. Under the terms
were granted, of the bill, if that system had been wiped out, that poor
Mr. SMITH. Mr. President, will the Senator yield? fellow would have been getting, assuming he would have lived
The PRESIDING OFFICER. Does the Senator from 5 or 10 years more, only $30 a month instead of the $50 a
Maryland Yield to the Senator from South Carolina? month which he had built up for himself over a long term of
Mr. TYDINGS. I yield. years with the railroad company. I submit that it smacks
Mr. SMITH. The Senator is losing sight of the cardinal of injustice when this man, who had looked forward all those
Principle behind most of this type of legislation, namely, years to a definite sum of money which he would have gotten
that all the beneficiaries must look to the Fealeral Govern- under that system, would have been compelled under the
ment and not to local or private agencies. The theory is Federal retirement plan contemplated by this bill to take a
,we must centralize here in the Federal Government. of much less sum.
course, we cannot argue against that because we want to In conclusion, I predict again if we pass the bill without
wipe out all the States and all their rights and have every- exemption that many Senators will find millions of laboring
thing all centered here in Washington! men who are going to be very much displeased, because I
Mr. TYDINGS. In conclusion, let me submit this pertl- believe there will be millions who will get less under the coin­
nent fact for the consideration of the Senate. Bear in pulsory retirement standard set by the bill than they now
mind, Senators, that when this measure was pending before expect to enjoy under the pension plans of private industry.
the Finance Commitee, the committee divided evenly on Mr. LONG. Mr. President, further on this line let me
whether they should adopt the amendment or should not 5aY­
adopt it. The Finance Committee was very close to adopting The PRESIDING OFFICER. Does the Senator from
It, and I understand from some of those who did not support Maryland yield to the Senator from Louisiana?
it in committee that at that time they opposed it solely on Mr. LODNG. I can use my own time to make this state­
the ground that they were afraid it might call into question ment.
the constitutionality of the measure. Inasmuch as since The PRESIDING OFFICER. The Senator from Lou-
that time other exemptions have been granted, why in the IsJLana.
name of heaven should not this exemption be granted when Mr. LONG. I have not heard anyone advocating this bill
It does as much for the workingman or more for the work- who does not doubt Its constitutionality.
Ingman than the provisions of the bill? Mr. TYDINGS. Does the Senator mean the amendment?
This Is one of the times when the Senator from New Mr. LONG. No; I am talking about the bill. Everyone
York (Mr. WAGNER], who is said by many to be the best doubts the constitutionality of the bill. Even the proponents
friend that labor has in Congress, is trying to take bene- of the bill doubt it. I desire to say to them that they not
fits away from the workingman which he would other- only have a right to doubt it but I do not believe it is possible
wise have, and when I, who am sometimes said to be not for the bill as it is now written to be held constitutional. I
friendly to labor, am trying to hold for the workingmnan the would bet everything I have on it. I do not mean that it wlfl
benefits which he already has under private agencies. The be held unconstitutional by a divided court, either. We need
Senator from New York does not say the amendment would not worry about the amendment of the Senator from Ne­
make the bill unconstitutional. braska [Mr. NORRIS] that it will take six to three to declare a.
I only ask that where private industry over a long period law unconstitutional. Not one out of nine will uphold the
of years has established a system which gives to the work- constitutionality of this measure, any more than one out of
Ingman more than the Federal Government can give him nine upheld the constitutionality of the N. R. A. Not a single
under the bill, let us give that exemption to such industry member of the Supreme Court of the United States will hold
so that the fruits of retirement may be full rather than this bill constitutional as now written.
meager, which will be the effect if the amendment shall What is it that the bill proposes? It is not a tax In order
not be adopted. to decentralize wealth. It is not a tax in order to serve the
Mr. LONG. Mr. President, will the Senator answer a common welfare. This is a pension system established by
question? the Government. That Is what it is-an unemployment sys­
The PRESIDING OFFICER (Mr. HATcH in the chair). tem established by the Government. We cannot put a taill
Does the Senator from Maryland yield to the Senator from on one end of It and a head on the other end of it and make
Louisiana? it anything else, and it does not necessarily depend upon any
Mr. TYDINGS. I yield, interstate transactions in order to have Its constitutionality
Mr. LONG. Would not the natural thing be for big con- maintained,
cerns that have already put into operation pension plans, If this bill Is going to be sustained, all well and good;­
when the Federal Government adopts this plan, simply to but let us not wipe out pension systems that are doing
say, "1We do not care to compete with the Government, and good, There will be hundreds and thousands of people
hence our pension plan is at an end"? who will become eligible for the private pensions that they
Mr. TYDINGS. I should think so. The predicition which have earned long before this bill is held to be constitutional
I made previously, and which I now restate, is that if the or unconstitutional; but if It finally goes into effect, and
bill shall be passed and there shall be no exemption, then the private concerns wipe out their private pension systems,
private concerns will liquidate their annuity funds, and and the pensions of men who are drawing $100 a month are
there will be established a uniform standard over the coun- wiped out on the ground that they should have $30. and
try which, if nc exemptions are granted, will result, in the then they do not get the $30, and we have destroyed the
case of millions of employees, In their receiving a lesser private pension systems, the harm will have been done in
annuity than they would have received had the exemptions two ways. The first is. we shall have given no pensions at
been granted. all. The second is, we shall have destroyed a private sys­
Mr. LONG. I wish to say, referring to the $50 about tems that may have considerable merit and may have Saom
which the Senator from Maryland spoke, that I have two or faults.
three good friends who are drawing $100 a month. I think let me say one thing further, Mr. President. I have no
my friend Moran, who served his time with the Standard particular faith in the good will of any corporation, except
Oil Co., today draws $100 a month under their pension plan. such as is necessary to its own interest. I am wholly in
I do not understand why anyone should oppose it. lot us favor of the regulations that are imposed in this particular
not now destroy these private systems, amendment upon private pension systems; but I think I
Mr. TYDINGS. Let m. interrupt the Senator to say that see chances for far less harm under the amendment that is
in the little village In which I have lived, Havre de Grace. proposed than I do under the regular bill because we muss
 953 CONGRESSIONAL RECORD-SENATF JUNE la
bear in mind the fact that there is a very, small contribu- drawing any retirement benefits under Industrial pension
tion made, to begin with, by the Federal Government. That plans and half of these are under railroad company plains
is one thing. We must bear in mind the further fact that This salient fact is a clear indication that there must be
It is left within the province of the various and sundry something wrong with plans which have succeeded in bring­
boards that are in control of the several functions under ing benefits and payments to only about 4 percent of those
the several titles of the bill to discontinue the system as who are under those plans,
prevailing and as maintained in certain localities when- Mr. ROBINSON. Mr. President, will the Senator yield
ever they desire to do so; and there is just as much room- for a further question?
aye, more--there is more practical room for abuse, and in Mr. LA FOLLETTE. I yield.
effect it will be found that in many instances there is more Mr. ROBINSON. The statement has been repeatedly made
abuse, in a publicly administered system of this kind than on the floor this afternoon by at least one Senator that the
there is in privately administered systems of this kind, number o1 workers who are now receiving benefits from
Under this particular amendment, the abuse of the private private arrangements for retirement far exceeds the number
system can be controlled. The Government can step in and that may receive benefits under this measure. I have been
prevent abuse in a private system, but it cannot step in and unable to reconcile that declaration with my knowledge of
prevent abuse in the public system, nor can it breathe life the facts. What are the facts in that particular?
into concerns destroyed by a law which may be unconstitu- Mr. LA FOLLETTE. Mr. President, the best information.
tional-aye, which is unconstitutional if I know anything I can obtain, refreshing my recollection, is that there will be
about the law. I venture the assertion that the enactment approximately 25,000,000 people under this Federal plan if it
of the bill without the amendment will mean the wiping out is not impaired by the amendment of the Senator from.
of whatever good has been done undbr the private systems, Missouri.
and no good will be done under the system proposed here. Mr. ROBINSON. And the number now Is said to be
So let us try the plan contemplated by the amendment. 2,000,000?
What harm can be done? We meet -here every year. Let Mr. LA FOLLEITTE Two millin.
us get this public pension system or public unemployment Mr. President, I do not wish to be understood as criticr,­
system to working. Let us see what good it does. Let us ing or not giving full credit to the employers who have
have it held constitutional if it can be held constitutional, attempted to set up these plains; but I wish ta point out that
which it never will be, but let us have it held constitutional the plans are not so beneficial, so far as the employees are
before we wipe out the pensions of millions and millions concerned, as many Senators seem. to feel, as I judge from
of employees under the private systems. When it is held the discussion which has taken place here this afternoon.
constitutional, and when it is proved to be reasonably work- It is stated by those who are supporting this amendment
able, that will be time enough to talk about destroying the that no harm can result, insofar as title II is concerned. if
private pension systems. we permit private plans to be approved which give benefits
We have plenty of time to do that. When we find that we equal to those contemplated under the Federal system.
have a baby here that is able to walk, and then is able to On its face, if we do not analyze that statement any,
stand alone, we shall have something on which we can base further, it is an appealing one; but the fact is that if this
our good judgment to destroy the private pension systems, amendment shall be adopted. inevitably employers will study
but let us not destroy a system that is now accommuodatingj the various advantages from a financial standpoint as be­
many more millions of persons than our own program may, tween the system set up in title II-the Federal system---and
accommodate, and a system that is paying more money than a private plan. That is inevitable. Therefore, to start
this system will pay, and risk it all subject to the hazard with, if we shall adopt this amendment the Government,
that what we are doing here may be either ineffectual or having determined to set up a Federal system of old-age
Invalid when It reaches the Court. benefits, will provide in its own bill creating that system., for
Mr. LA FOLLETTE. Mr. President, I am opposed to the competition, which in the end may destroy the Federal sys­
amendment offered by the Senator from Missouri [Mr. temn; and I submit that no Senator approaching this problem
CLARK]. I recognize that upon its face it has much appeal; from a logical, businesslike point of view could for a moment
but, as stated by the Senator from Mississippi, after most believe that to be a sound public policy.
careful consideration in the committee I came to the con- If this amendment should be agreed to and the employer
elusion, as did a number of other Senators who had pre- should sit down to compare the Federal system, as provided
viously been inclined to favor the amendment, that Its in title la, with the system being urged upon him by some
adoption would very seriously undermine this particular title insurance broker, one of two things would inevitably result.
of the act, namely, the old-age benefit title. Either he would decide that it was better for him to employ
Mr. ROBINSON. Air. President, will the Senator yield? only those in the younger age groups and to provide a sys­
The PRESIDING OFFICER.. Does the Senator from Wis- tem embracing all his employees under a private plan, or he
consin yield to the Senator from Arkansas? would employ a fair share of the older men but do all in
Mr. LA FOLLETTIE. I yield.' his power to encourage the older employees in his employ­
Mr. ROBINSON. The Senator has Just made a sta4e- ment to elect to come unader the Governmens plan, so that.
ment which I believe to be correct. I should like to have under either course he would be able to provide, as liberal
him elaborate his thought on that subject if he chooses to benefits as the Federal system Without paying as much for
do so, and explain why, in his opinion, the adoption of thi them, because the Federal system would have to-carry the
amendment exempting existing arrangements and institu- older Workers.
tions will undermine and impair the effectiveness of the Mr. GEORGE. Mr. President, may I ask the Senator from
proposed Federal system for retirement. Wisconsin if he is not really making an argument against
Mr. LA FOLLETTIE. I shall be glad to attempt to do that, the whole bill-that is, against all the provisions under dis­
Mr. President. cussion? If employers are going to assue the attitude the
In the discussion here this afternoon it has been quite Senator thins they will assume with reference to the privi­
evident that many Senators are laboring under the impres- lege which would be accorded them under this amendment,
sion that all the existing private pension plans are of a high will they not also try'to escape Just as much taxes as they
standard, and that they confer great benefits upon the em- can, and will they not also try to get Just as much servicer
ploYees covered by them. The contrary is the ,act. most of as they can for every dollar they expend, and will they mot
the plans which are now in existence do not bring, in the also use every, bit of labor-saving machinery they can
end, great benefits to the aged employees. This is conclu- possibly employ?
sivelY shown by the fact, as brought out in the record before If the Senator's hypothesis Is correct that our Industries
the committee, .that, while there are now approximately some are going to try to take advantage of an amesdment which.
2,000,000 employees under private plans other than those of they themselves certainly may desire, Is not the Senator
railroad companies, only approximately 165,000 persona are making an argument against th vwhol bi?
 1935 CONGRESSIONAL RECORD-SENATE 9533
Mr. LA PoLLETTE. No, Mr. President; r do not see that ment. Let us take the case of the United Railways in Balti­
Point, if I may say so to the Senator, because the tax pro- more, cited by the Senator from Maryland. It might be very
vided is uniform, advantageous to them to stay out of the proposed system
Mr. GEORGE. I know it Is uniform, but if the employees for a number of years, until they have relatively more aged
are going to assume the attitude assumed by the Senator employees than they now have, and then to dump them over
from Wisconsin and the Senator from New York and other Onto the Federal system, but thereby they would burden
Senators, will not the American business man, actuated by and help to upset the actuarial basis of the Federal system;
such selfish motives and impulses as have been here ascribed and, if it were done in a large number of instances, such
to him, try to get the maximum service, the maximum pro- practices would upset it altogether.
duction, out of every laborer to whom he is paying a wage, Much has been said in the debate about destroying the
to the end that his excise tax, which is measured by his pay existing plan. So far as I know, there is not a private pen­
roll, will be just as little as possible for the amount of work sion plan in the United States which will not have to be
which is done, and will he not be influenced and Induced to revised if the bill shall become a law, whether the amend­
employ a younger man who can work more and harder, and ment of the Senator from Missouri shall be agreed to or
Perhaps can turn out more product that the older employee? not. Everyone of them will have to be changed to meet the
Mr. LA FoLLETTrE. Unfortunately, Mr. President, with- requirements of this amendment, and It is just as easy for
out any tax at all; that has been the tendency of industry those socially minded employers who desire to add additional
under the pressure of economic conditions. But I do not benefits to the plan now proposed in title 3U of the bill to
want to be a party to making an additional inducement for revise their existing plans so as to offer benefits in addition
further lowering the average hiring age In the United States, to those provided in title II as it is for them to revise them
for I may say to the Senator that the situation which con- in order to take advantage of the amendment offered by the
fronts employees between the ages of 40 or 45 and beyond Senator from Missouri, if it shall be agreed to.
Is becoming one of the most serious problems which this Reference has also been made in the debate to the situa­
country is now called upon to solve. tion confronting employees who have been under these plans,
Mr. GEORGE. I fully agree with the Senator. and it has been argued that if the bill becomes a law those
Mr. LA FOLLETTE. The Senator is aware of the fact that upon the verge of retirement may lose all of their benefits.
during the depression, a man 40, 45. or going on 50 years of Unfortunately, that happens all too often under private
age, no matter how well preserved he might be, has found It pension plans. But the employers who have systems which
very difficult to secure reemployment in competition with are upon a sound basis, and which have any social justifica­
younger persons. tion at all, have established reserves for their individual
Mr. GEORGE. Mr. President, I must not trespass on the employees. To say that such employers would use the enact­
Senator's time, but permit me to say that I know that to be ment of the pending bill as a justification for refusing to pay
true, and I know that the Senator is not making an argu- the beneficiaries of the reserves which have been contributed
ment against the bill; but it does seem to me that an argu- by employees and employers over a long period of time is to
ment against the amendment is an argument against th make an indictment of the integrity of these forward-looking
whole philosophy of the bill. I do not share the view that industrial leaders which I would not make upon the floor of
American industries as a whole will undertake to take ad- the Senate or in any other place. If there be any such
vantage of this amendment, and will employ only yon unscrupulous employers, the individual employee has not a
men, because their obligation would be the same as it is Chinaman's chance with them anyway, because when he got
under the plan set out in the bill. But if the Senator is up to within a few months of the time when he would be
correct, it seems to me that we might as well accept as an entitled to the benefit provided, he would be discharged by
established fact in the beginning that the same selfish mo- the employer and would lose his benefits.
tives will induce the American employer to hire and employ Wr. TYDINGS. Mir. President, will the Senator yield?
the young man who can produce more per hour than the old Mr. LA FOLIEITE. I yield.
man. Remember, the employer's tax is measured by his pay Mr. TYDINGS. Assuming what the Senator says to be so,
roll, and that will also induce him to use every bit of labor- then what harm can there be in granting them an exemption,
saving machinery he can put into his establishment. if self- if they build up these reserves, and the benefits are superior
ishness is the driving motive of all American business, It to those contemplated by the bill?
seems to me the Senator's argument is against the whole Mr. LA FOLLETTE. I have already pointed out a number
bill as much as it is against the amendment, of reasons why I think it is an unwise policy. The Senator
Mr. LA FOLLETTE. I do not see that, because the was not in the Chamber when I covered those points, and as
amendment sets up a situation whereby one of two things, my time is limited, I beg him to excuse me from going over
as I started to say, will result; either the employer will elect the ground again,
to oly
ir eolein the younger age group and will put Mr. TYDINGS. May I ask the Senator one other ques­
tohiewonlygopeoplemlyeunethprvepab- tion, which I think is apropos the point of which he Is now
cause hiring them in the lower age group the employer will speaking?
be able to secure his aninulties at a cheaper rate; or if he Mr. LA FOLLETTE. Certainly.
elects to keep some of his older employees he will urge them, poin toYwichSI Teerd he iSenator saydtath thacoered
woul
he will use all his persuasive and his economic power to get beinhar winh grantingdthes exmpins?
te rsythr ol
them, to elect to take their benefits under the Federal sys-behringatgtesexmio?
tem; and if that shall be the eventuality, then the Federal Mr. LA FOLLETrE. I did.
system will be carrying all the heavier risk, because it wil Mr. LAYFOLEGS. ThnoIwilra the Senator'ha stmpedmerkto
have the older groups, which are more expensive to carry. M.L OLTE o h eao a epe et
I can understand Senators being completely against the doItwhat I said
is may firmI would not do.
conviction, I may say to the Senator from
objectives which are outlined in the pending social-security Maryland, after the most careful study I have been able to
bill; I can understand their position, although I do not agree make of this whole question, that if the Federal Government
with It; but it seems to me that all Senators who regard in establishing this Federal system should adopt the amend­
the objectives of this title as being sound public policy ment of the Senator from Missouri it would be Inviting and
should hesitate long ere they accept an amendment which encouraging competition with its own plan which ultimately
will tend to break down and to destroy the effectiveness and would undermine and destroy It.
the success of the Federal old-age-benefit system. I do not think the amendment which the Senator from
The ,Senator from Maryland urged that by adopting this Missouri accepted, as tendered by the Senator from Wash­
amendment we should give an opportunity to employees and ington [Mr. Scnwzauz~'sAcn] is any protection at anl to
employers to elect to continue under their present prvt employees. It reads:
plan, but to leave It open for them later to come in under Provided, That no employer shall make election to come Undsu
the Federal system if they wish to do so. That, It seems to or reanUne h plan a con11tion precaent,or a reuree
me, is an argument which will not stand analysis for a ino- cc continued employment.
9534 CONGRESSIONAL RECORD-SENATE JUNE 18
Mr. President, that sounds well; but how are individual r admit that the administrative responsibilities under
employees all over the United States to be protected from this bill, as it was reported, are great, and I was coming to
being subjected to economic coercion, either direct or indi- that very point in a moment. That is another reason why
rect, which their employers may exert upon them? It is I think the adoption of the amendment offered by the
perfectly silly, it seems to me, for any person to contend Senator from Missouri would be a very grave mistake from
that a mere affirmative declaration in this amendment will the point of view of those who are in sympathy with the
be any protection whatsoever to employees from coercion objectives of this proposed legislation.
upon the part of the employer. Mr. President, under the amendment of the Senator from
In that connection I may say that I am authorized to make Missouri, employees are to have the right to elect whether
the declaration on the floor of the Senate that the Amer- they shall come undcr the Federal plan or whether they
ican Federation of Labor regards the amendment offered shall stay under the private plan. Furthermore, employees
by the Senator from Missouri with great apprehension. The will be able to elect, later, whether they desire to change
A. F. of L. is convinced that it will do more to engender the from the private plan to the Federal plan; or, if an employer
type of company unionism whiuh the Wagner labor-disputes decides to abandon his system, then all of his employees
bill-passed by the Senate some days ago-was designed to will be transferred over into the Federal plan. There will
prevent than any other single thing which can be done, be involved in transfers of this kind, In hundreds of thou­
Mr. CIARK. Mr. President, will the Senator yield? sands if not millions of instances, separate calculations,
Mr. LA FOLLETTE. I yield, which will have to be made, and there will have to be audits
Mr. CLARK. Would the Senator mind pointing out of the books of the various corporations having private
wherein my amendment will tend to promote company annuity plans with relation to every individual employee
unionism? It is very easy to make such a statement. to determine whether the proper taxes have been pal!i for
Mr. LA FOLLETI7E. It is based upon the theory, as I the employees included in the Federal system.
understand, that private pension plans which enable the em- If there could be anything better calculated to destroy
ployer to have the right to say whether an employee is to be the effectiveness of the Social Security Board and to burden
a beneficiary under one type of plan or the other produces It with a task beyond human execution, I fail to see how
a condition in which the employee feels unable to assert his it could be devised. At least it goes beyond the powers of
economic rights. Labor also feels, and I think rightly so, my !imagination to conceive of any task which could be
that the employer controls the private annuity plan, and is imposed upon this board which would more quickly break
likely to use it to keep organized labor out of his plant. down its efficiency and its administration,
Mr. CLARK_ Mr. President, will the Senator further Mr. WAGNER. Mr. -Presldent-
yield? The PRESIDING OFFICER (Mr. HATCH in the chair).
Mr. LA FOLLETT7E. I yield. Does the Senator from Wisconsin yield to the Senator from
Mr. CLARK. If the Senator will take the trouble to read New York?
the amendment he will find that suggestion expressed in Mr. LA FOLLETTr'E. I yield.
the negat!ive in the amendment as I introduced it, and Mr. WAGNER. Of course it must be conceded that It
specifically covered in the amendment to the amendment would be to the advantage of the employer to have as mn
offered by the Senator from Washington.aspsilofhse lyesougr-n
Mr. LA FOLLETTE. I do not agree with the Senator .
as psiLeAo hisLEmployTee youngeor' mein, sw tkn
that the affirmative statements contained in this amer d- M.L OLT'.TeSntrspiti eltkn
ment are any protection whatsoever to millions of em- and I agree with him entirely.
ployees scattered all over the United States. Thsbd Mir. WAGNER. I do not see how there can be any ques­
recognized the problem when it went on record overwhelm- tion about that, because the older men get as an annuity
ingly in favor of setting up specific machinery in an attempt more than they put In. We recognize that the employer
to protect labor in its right to organize and to bargain col- still has some economic Influence over his workers. Sup~­
lectively. We have just completed a tragic experience in pose a worker were employed at the age of 55, and should
regard to section 7 (a) of the National Industrial Recovery elect to go into the private system, and the employer would
Act, where there was an affirmative legislative declaration rather not have him in that system, but would rather have
which proved hardly worth the paper on which it was him in the Government system: It is conceivable that there
written, might be some economic influence used to induce the em­
Mr. LONG. Mr. President, will the Senator yield? ployee to accept the Government plan rather than the other.
Mr. LA FOLLETT'E. I yield. Mr. LA FOLLETITE. I have no doubt, Mr. President, that
Mr. LONG. I did not think we went so very far Ito set up such influence will be exercised. Furthermore, I may point
specific provisions to protect labor. The Senator is one of out, as the Senator well knows, that an Inducement is al­
those who voted to let the value of labor be set by a more or ready afforded to the older employees to elect to come under
less arbitrary order, which down in my section of the the Government plan, as they will get a larger percentage
country amounted to $19 for a month's work. I do not see of the employer's contribution if they do so. Under the
why we ought to kick on a thing like this. amendment, inducements would be offered to both the em­
Mr. LA FOLLETTE. I debated that question, Mr. Presi- ployer and the employee to load down the Government plan
dent, with the Senator when the work-relief measure wa with the older employees and to upset its actuarial basis,
under consideration. I stated then, and I now repeat, that and, as I said at the outset, ultimately to destroy the whole
the Senator was opposed to the measure, and that I refused plan.
to follow his leadership in that regard when he sought to There is one other point In connection with the Increased
defeat the measure, rather than to secure Its enactment. administrative problems which will be presented to the
Mr. CLARK. Mr. President, will the Senator yield for board if the amendment of the Senator from Missouri shall
a suggestion? be adopted: A worker who has been in the employ of his
Mr. LA FOLLETT. If the Senator will bear in mind employer under a private plan for a number of years either
that my time is running out. elects to go under the Federal plan or he loses his Job with
Mr. CLARK. I simply desire to suggest to the Senator, that employer and goes to another. Think of the many
when he says that none of these propositions can be valid ialculations which will have to be made after an audit of
or controlling, that the control of the subject and the the books to find out Just what that man's wages were dur­
enforcement of the subject are vested in the very same ing all the time he. was in the first employer's employ; and
board on whom the validity of the whole act depends, and if he shall have g(~p to another employer, additional calcu­
who are to administer every provison of this measure which lations will have to-be made in that Instance,
the Senator thinks to be of such great merit. I think the administrative calculations that Will have to
Mr. LA FOLLETTE. Yes, Mr. President; but the Senator be made If this amendment shall become law will run into
desires to increase their responsibilities several million fold astronomical figures and will entail an administrative forc
by the amendment which be Is proposhng which will, -ak any other agency of the Government. In
 1935 CONGRESSIONAL RECORD-SENATE 9535
relation to the number of its employees, shrink into insig- I shall briefly consider titles II end V3II because It is the
nificance. view of many, as well as my own, that they exceed the power
Mr. President, I desire to say that, so far as I know, the of Congress to enact Into law.
Committee on Finance heard every person who desired to These titles do not provide for Appropriations to the States
be heard upon this question. The hearings are here. They as do the other titles, which provide for child welfare, old-
embrace 1.354 printed pages. There are only two instances age assistance, unemployment compensation, public health,
where any of the witnesses who appeared before the com- and maternal care. They seek to set up a Federal system
mittee urged the proposition which is now being favored of providing for compulsory old-age annuities. This is ap-.
by the Senator from Missouri. One was Mr. Folsom- parent from the face of the bill, which is entitled "An act
The PRESIDING OFFICER. The time of the Senator to provide for the general welfare by establishing a system
from Wisconsin on the amendment has expired. of Federal old-age benefits ", and so forth. Title II is desig­
Mr. LA FOLLETTE. I will speak on the bill. One was nated Federal old-age benefits, and title VIII taxes with
Mr. Folsom, of the Eastman Kodak Co., who came, I sub- respect to employment. It Is clear from a reading of the
mit, primarily to argue in favor of the plant-reserve type bill, as well as the reports, that the taxes Imposed by title
of unemployment insurance, but who, it is true, incidentally VIII are to be levied for the purpose of paying for the
pleaded for the exemption of private pension plans. The Federal old-age benefits provided for under title 31I. It must
other was a Mr. Forster, of Philadelphia, a very estimable be conceded that the Federal Government, being a govern­
gentleman whom I have known casually for several years. nment of delegated powers, cannot directly set up a system of
but who, let it be said, is in the business of selling this kind compulsory old-age annuities. This is evident from such
of insurance, decisions as United States v. Knight (156 U. S. 1), holding
If the amendment offered by the Senator from Missouri that the power of a State to protect the life, health, and
shall become a, law it will provide a bonanza for the brokers property of its citizens is a power not surrendered to the
who are engaged in selling this type of insurance, because Federal Government and is essentially exclusive to the State.
they will have all the employers of the United States as pros- This principle was recently reaffirmed by the Supreme Court
pects, since all employers can derive financial profit through in the Railroad Retirement Act decision, the effect of which
establishing private annuity plans covering their younger the Chief Justice said in his dissenting op~inion was to deny
employees, leaving the Federal system to take care of the to Congress " the power to pass any compulsory pension act
older employees. Wherever they can devise a plan which for railroad employees." If we cannot pass a compulsory
appears to be of less expense to the employer than the public Pensio-n act for railroad employees engaged In interstate
plan, there will be a sale prospect for the Insurance broker, commerce, how can we pass a pension act for employees
The insurance brokers will be reaping commissions and let engaged in intrastate, as well as interstate, commerce? Yet
it be said, they will be getting commissions and will be this is what we are trying to do.
getting pay for selling something In this country which Congress, in titles II and VIII, knowing that It cannot di­
everybody would otherwise be compelled to buy. rectly collect premiums to pay compulsory old-age annuities.
It Is my understanding that most of the large employers is attempting to reach this result indirectly through the tax-
In the United States, who have the kind of plans which have Ing power. It is obviously disclosed on the face of the act
been referred to in the debate as being good plans, have what is trying to be done. The premiums are collected as
already made studies of the bill as It was reported from the taxes under title VIII and the annuities paid as Federal
Senate Committee on Finance and have come to the con- old-age benefits under title II1. I do not believe anyone
clusion that It is better for them to revise their plan, to ought seriously to contend that Congress by changing the
bring their employees under the Federal title, and to sup- form of the bill can overcome the constitutional limitations.
plement the Federal plan with their private plan to take As stated by the Supreme Court in Linder v. United. States
care of certain groups of their employees, especially those (268 U. S. 5)­
In the higher-income class. Congress cannot under the vretext of executing delegated power
I recognize the right and the obligation of any Senator Pass laws for the accomplishment of objects not intrusted to
the Federal Government. And we accept as an established doc­
who regards this proposed legislation as unsound, from the trine that any provision granted by the Constitution not naturally
point of view of public policy, to oppose it and to vote and reasonably adapted to the effective exercise of such power
against it on the final roll call; but to those Senators who but solely reserved to the States is invalid and cannot be en­
believe that the objectives sought by this title of the bill forced.
are sound, I appeal not to take this oblique method of de- This is not the first time we have attempted to exercise a,
stroying this part of the bill. I absolve any Senator from power which belongs to the States or the people. Congress
any Intent to do that and especially the Senator from Mis- at one time passed an act prohibiting transportation in
sourl. I know that he and the other Senators who have interstate commerce of goods made at a factory In which
been supporting the amendment are doing so In the best of 30 days prior to removal of the goods children under cer­
faith, but I appeal to the Senators who have not considered tain ages had been permitted to work. This was, of course,
the amendment carefully and who believe In the principles an attempt to -regulate child labor under the constitutional
of the bill not to vote for the amendment and thus to pre- power to regulate commerce among the several States.
serve the Integrity of the bill. The Supreme Court held this act unconstitutional, stating
I reserve the balance of my time on the bill, that the grant of power to Congress over the subject of
Mr. KING. Mr. President, it had been my purpose to dis- interstate commerce was to enable it to regulate such comn­
cuss somewhat in detail various provisions of the pending merce and not to give it authority to control the States in
measure and to examine a number of decisions of the Supreme the exercise of their police power over local trade and mann­
Court of the United States, which, in my opinion, condemned facturing (Hammer v. Dagenhart, 247 U. S. 251). Having
as unconstitutional titles II and VIMI. However, the time for failed in this attempt, Congress next tried to regulate -child
general debate has passed and under the unanimous-consent labor under the taxing power. The Supreme Court also held
agreement there is but limited opportunity for discussion, the taxing act unconstitutional, stating in the Child Labor
Mr. President, with the general purposes of the bill I am in Tax case (259 U. S. 20) that the decision in the Hammer
accord and sincerely desire that some measure within the v. Dazgenhart case was Controlling and reaffrming Its posi­
authority of the Federal Government might be enacted that tion that Congress could not "1under the pretext of exercis­
would tend to accomplish the results desired. I am anxious ing its powers pass laws for the accomplishment of objects
to see ample provisions made for old-age benefits and for not Intrusted to the Government."
unemployment insurance. I cannot help but believe that this I1 might also cite numerous other cases bearing out this
measure will prove disappointing and will not attain the samec principle, such as Hill v. Wal~ace (259 U. S. 44) and
objects desired. That several of Its provisions will be held Trusler v. Crookcs (269 U. S. 475), holding that Congress Can­
Invalid I am constraine t~o believe. not under the taxing power regulate boards of exchange.
 9536 CONGRESSIONAL RECORD--SENATE JUNE 18
Yet in this bill we are trying to do that which the Supreme against aged people to tax their meager earnings after they
Court has repeatedly held we are without power to do. become 65 and at the same time deny them any benefits
It has been stated on the floor that the Railroad Retire- under title 3I1.
ment Act decision does not affect this bill, due to the fact (5) In the case of a person who dies before attaining the
that that act related to the power of Congress to regulate in- age of 65, his estate receives under title II 3V2 percent of the
terstate commerce and not to the power of Congress to levy total wages determined by the Social Security Board to have
taxes. But this is an old argument. This argument was been paid to him with respect to employment after December
also advanced in the Child Labor Tax case after the Supreme 31, 1936. These are the same wages upon which he is sub.
Court had already held that Congress had no power to regu- ject to tax under title VIII. There seems to be no justiflca­
late child labor under the commerce clause. The Supreme tion for paying to the estate of such person subject to tax
Court stated that Congress, likewise, had no power to regu- under title VIII a certain portion of his wages regardless of
late child labor under the taxing clause. Do we wish to go his financial needs, unless It is admitted that such payment Is
around the circle again now that the Supreme Court has a return of th! taxes paid under title VIII.
held in the Railroad Retirement Act decision that Congress (7) An individual who is not qualified for -benefits under
is without power under the commerce clanise to provide corn- section 202 of title II of the bill will receive payments under
pulsory pensions to railroad employees? in view of this de- title II equal to 31/ percent of the wages paid with respect to
cision. and in view of the Child Labor Tax case, how can it employment after December 31, 1936, and before he reached
be said that Congress can provide pension plans for employees the age of 65. These wages are the same as those with re­
under the taxing clause? Have we not already learned a spect to which such person is subject to tax under title VIII.
lesson from cases already decided? This means that an employee who has received wages subject
I listened with interest to the argument advanced by the to tax under title VIII before he attained the age of 65 of
Senator from New York [Mr. WAGNER] in support of this less than $2,000, or an employee who did not receive wages in
part of the bill. He relies to a large extent on the decisions each of at least five different calendar years after December
of the Supreme Court in the Veazie Bank case (8 Wall. 31, 1936, and before he attains the age of 65, will get back 3',j
553) upholding a 10-percent tax on bank notes issued by percent of such wages regardless of his financial needs. This
State banks, the McCray case (195 U. S. 27, 59) upholding a can only be Justified on the theory that he is being returned
discrimniuiting tax upon the sale of oleomargarine, the Dore- the taxes he paid under title VIII.
miss case (249 U. S. 89) sustaining the constitutionality of It is true that the tax under title VIII is paid into the gen­
the Harrison Narcotics Act, and the case of Magnano V. eral fund of the Treasury. But this was also the case in
Hamilton (292 U. S. 40) upholding a State tax of 15 cents a respect of the child-labor tax imposed by title XII of the
pound on butter substitutes. But the sole objection to these Revenue Act of 1918 and the tax on grain futures Imposed by
taxes was their excessive character. Nobody contended that the act of August 24, 1921 (42 Stat. 187), The Supreme
Congress did not have the power to lay a tax upon bank Court did not hesitate to hold both of these taxes unconstitu­
notes issued by State banks, or to lay a tax upon oleomar- tional. (Child Labor Tax case, 259 U. S. 20; Hill v. Wallace,
garie. Nothing except the taxes appeared upon the fac 259 U. S. 44.)
of the acts. This was pointed out by the Supreme Court But suppose the two titles are held to be separate. How
in the Child Labor Tax case and was also emphasized in can title II standing alone be upheld, for how can it be said
the Doremus case, in which a regulation subjecting the sale that Congress is providing for the general -welfare by paying
and distribution of naxcotic drugs to official supervision and bounties to wealthy salaried individuals, or their estates at
Inspection was upheld as a necessary means to enforce the death, and at the same time deny such payments to agricul­
special tax imposed upon such drugs. But here the face of tural laborers, persons employed by religious or educational
the bill itself shows that the tax under title VIII has been institutions, and domestic servants? Moreover, under title
adopted as a mere disguise to permit the Federal Govern- VIII, when standing alone, there is a discrimination In Its
ment to set up a system of compulsory old-age annuities, classification apparently in violation of the fifth amendment.
which it has no power to do under the Federal Constitution. Why should stenographers, clerks, janitors, and so forth,
doing the same class of work, be exempted from a tax when
Let us glance at these two titles to see whether or not they are working for religious, charitable, scientific, or edu­
they disclose on their face their real purpose. cational Institutions and subject to the tax when working for
(1) The employees subject to tax under section 801 of other institutions or business?
title VIII of the bill are the only persons who receive benefits If one looks at the face of the bill, the conclusion seems
under title II of the bill. inescapable that the tax under title VIII Is not a tax at all,
(2) The employees whose wages are exempt from the tax but an attempt by Congress to assert a power reserved to the
under section 801 of title VIII of the bill do not receive any States and the people under the tenth amendment. The
benefits under title 3II of the bill, decision cited by the Senator from New York (Mr. WAGNER,
(3) The tax on employees -is computed on a percentage of dealing with State workmen's compensation acts do not
the wages received by the employee after December 31, 1926, appear to be decisive of this question, for these acts deal
with respect to employment after such date. The old-age with the powers reserved to the States or the people and not
benefits under title Ir are computed upon wages received by to the powers delegated to the Federal Government under
the employee after Deecember 31, 1936, with respect to em- the Constitution. I do not see how we can expect the Su­
ployment after December 31. 1936. preme Court to be "misled" by the subterfuges we have
The PRESIDING OFFICER. The time of the Senator adopted in this bill in the attempt to exercise a power over
from Utah on the amendment has expired. which Congress has no control under the Constitution. I can­
Mr. KING. I will speak a few minutes, then, on the bill. not help but believe that under the decisions of the Supreme
Mr. President, continuing, Court titles II1 and VII will be declared unconstitutional.
(4) Services performed by an individual, after he ha The PRESIDING OFFICER. The question Is on the
attained the age of 65 are not counted In arriving at the amendment of the Senator from Missouri.
benefits payable under title II but are subject to tax under Mr. VANDENBERG. Let us have the yeas and nays.
title VIII. The Purpose of this provision is to discourage Mr. HARRISON. Mr. President, I am convinced that It
individuals from working after they attain the age of 65. WMl be impossible for us to reach a vote on the pending
However, some of the people who will be 65 at the time this amendment tonight. There are, however, some other amend­
bill is enacted will be forced to Pay taxes on their wages, ments which I think we can dispose of which will not take
although they cannot obtain any benefits at all under title IIL much time. I have talked to a number of Senators, and I
Manifestly It is claimed that this is done to mislead the hope the uinanimous-consent agreement which I send to
court Into believing that title 3II has no direct connection the desk may be entered into.
with title VIMI But I do not believe the court will be misled The PRESIDING OFFICER. The proposed unanimous-
by such subterfuge, and It is certainly a rank discrimination consent agreement will be read.
1935 CONGRESSIONAL RECORD-SENATE 9537'
The legislative clerk read as follows: that thereafter no Senator shall speak more than once nor longer
Ordered, by unanimous consent, That when the Senate concludes anhaendment or moretion rnelatngrthneretha.
ta 10 minutes upon
Its business today it take a recess until 12 o'clock noon tomorrow; 0mntsuoayaedetoroinrltnghrt.
that at not later than 1 o'clock p. m. tomorrow the S$enate proceed The VICE PRESIDENT. Is there objection?
to vote without further debate upon the pending amendments; and Mr. LONERGAN. Mr. President, I desire the attention of
that thereafter no Senator shall speak more than once or longer the Senator from Mississippi. Does the proposed agreement
than 10 minutes upon the bill or any amend ent or motion
relating thereto, say " pending amendment " or " pending amendments "?
01T
The R
RESDIN Is her obectonMr. HARRISON. The Senator from Connecticut is inter­
The PNRES obt FiCeR. Isetheore. becin ested in one of the committee amendments and desires to
Mr. LcNERAN obaine thesidoor, make a motion with reference to that matter, as I under­
Mr. LONERGN.G OMr.Eresideent- rfomOeo stand. Under this agreement he will have 25 minutes after
hsthe PlorES.N FIER h eaorfo rgn1 o'clock to speak on that question.
has tHeRRIoOr. Wl h eao fo rgnyedt Mr. LONERGAN. That is satisfactory.
Mer.i HARSN.Wl the Senator from Orncictt
akaqegtonyedt The VICE PRESIDENT. Is there objection to the proposed
Mr. McNARY. Mr. President, Just a moment. Reserving unonandmosthnentagreementas modifiedi etere Chinto. ar
the right to object, and making the same reservation for the nnadteareeta oiidi nee no
Senator from Connecticut, I desire to have it understood, as SOCIAL SECUITY AGAINST FEDERAL POLITICS
accompanying this proposal, that there shall be an agi eement Mr. SCHALL. Mr. President, I apprehend that few Mem­
that no action shall be taken with respect to the Holt case bers of the Senate are opposed in principle and in fact to
tomorrow, because I understand that at 12 o'clock the ma- the general purposes of this bill as advertised, namely, un­
jority and minority members of the committee will file re- employment insurance, old-age and childhood relief, and
ports. I desire to have them printed and lie over,-at least for sundry measures of social relief.
the day. The striking and outstanding features of the bill, as
Mr. GEORGE. Mr. President, I may say that in the event analyzed by those who have studied it, are:
the Senator-elect from West Virginia [Mr. HOLT] should First. The small and even trifling amount of relief it will
present himself, the program of the Privileges and Elections afford in the coming fiscal year 1936 to meet urgent condi­
Committee would be to present such a report as. the com- tions of unemployment and social helplessness, as compared
mittee may finally submit, and ask for the printing of the with the vast program of promises to be fulfilled in the
report, and that the matter lie over at least for 1 day. years 1939 to 1949, when the planned chaos of this so-called
The PRESIDING OFFICER. Does the Senator from " emergency ", we hope, will be over.
Georgia desire the attention of the Senator from Oregon? Second. Compare the estimate of only $400,000,000 which
Mr. GEORGE. I merely stated that if the Senator-elect will be realized under the bill for unemployment insurance
from West Virginia should present himself tomorrow, the and old-age relief in 1936 with the $5,000,000,000 appropri­
purpose and program of the Privileges and Elections Coin- ated subject to the allocation of the Executive for his
mittee would be to ask that the report submidtted be printed emergency in 1936,
th materlieove fo atleast 1 day, so that it
andtha In other words, for the 1936 emergency of the Execu­
anud that ithermatere ithteovergforativ prgative, we have appropriated 12 times the amount available
Mr. HARRISON. Mr. President, I may say to the Senator in 1936 for unemployment insurance and old-age relief
from Oregon that I have conferred withW.the EELY; colleague of the combined.
Senaor-eect romWestVirgnia an he Thus, wider the cloak of "1social security,"1 for the unem­
senator-elethikw from West Virogini wit. Nthis m ] andr he ployed, old age, and childhood relief, we give the Executive
o'clock, anyway, under this arrangement--that he does not forallofthe40000,000 eqinv hePrsient
ote cast
vo93 peroec-
ial$2
feel that there would be any objection, and that the Senator- lo te4,0,00vtscs i h rsdeta lc
elect would not present himself until after this matter sholdtion. Social security is needed now, in the hour of adversity,
o. Iam
havebee diposdcnfimedin hatby hat
Iam onfimedin hatby hatthenot in 1939 or 1949, after the "emergency" is presumed to
o. diposd
havebee
Senator says. b at
Mr. ONG Wecantakeup he oltcaseat omeime In a published analysis of the practical effects of the bill
tomorrow, however, can we not? I note that beginning January next a tax of 1 percent on
Mr. HARRISON. Oh, yes; if we get to it. pay rolls will begin to finance unemployment insurance,
Mr. McNARY. No, Mr. President; I understood from the which will amount to $200,000,000, and that the Nation and
response to the statement I made that that would not be the States will increase this to $400,000,000-avaIlable a year
done I intended to imply that I thought it was fair and later, when the Government reports the collections,
orderly for the reports from the committee to be filed at 12 In 1937 this pay-roll tax will jump to 2 percent for unem­
o'clock, and that they should go over for at least 1 day. I ployment insurance, and another 2 percent to finance old-
think that statement was confirmed by the Senator from age benefits. Thereafter, we are told, these tax rates will
Georgia, who thought likewise, steadily mount until by 1949 they are estimated to reach
Mr. GEORGE. I should ask that the matter take that $4,000.,000,000-a fifth less than the amount which for 1936
direction, Mr. President. If the Senator-elect should present we toss to the Executive for his campaign fund in one lump
himself tomorrow, the reports of the committee would be in su ujc ohsaloaina emstrosycoss
order; and I should certainly request that the matter lie over If we are here as practical statesmen, and not rubber
for 1 day, in order that the reports might be printed and stamps for a Presidential campaign committee, the ques­
made available to the Senate. tions that confront us are these:
Mr. McNARY. That is correct. Then I suggest, after con- F'irst. This emergency which we aim to meet is in the
ferring with the Senator from Rhode Island (Mr. METCALF], flsca~l year 1936 instead of 1949. Then why make available
that it would be well to provide that 15 minutes should be for unemployment insurance and old-age relief only $400,­
allowed on the bill and 10 minutes on the amendments. 000,000 for 1936 against $4,000,000,000 in 1949?
Mr. HARRISON. I have no objection to that. Second. If we are for social security and not for Federal
Mr. McNARY. Very well. Then, with that modification, dominion over the States, then why in this day of emergency
I ask that the proposed agreement be stated. do we make only $400,000,000 available to unemployment
The VICE PRESIDENT. The clerk will state the modified insurance in 1936, agains $5,000,000,000 available as an
Thenlegislativencerpreoad sflos Executive political club In 1936?
The egilatve as ollws:The
cerkrea situation stands that for every dollar available for
Ordered, by unanimous consent, That when the Senate concludes social security in 1936, we give $12 to the Executive to club
its business today it take a recess until 12 o'clock noon tomorrow; teSaeys vnteCnrsIt opinewt
that at not later than 1 o'clock p. m- tomorrow the Senate proceed teSaeys vnteCnrsIt opinewt
to vote' without further debate upon the pending amendments, and the dictates of the White House candidate for reelection.
 9538 CONGRESSIONAL RECORD-SENATE JUNE 18
Is that social security, or is It Federal politics? circles to cut down the surplus supply of textile mill goods
Does that make for even the political security of the States and boost consumer prices.
from Federal domination? (c) Even in April 1935 the American Federation of Labor
In order to make this plan of social security effective finds 11,500,000 unemployed as compared with 7,000,000 re­
now, when it is bitterly needed, instead of In the remote fu- ported by the American Federation of Labor for April 1932.
ture, after the emergency is, as we hope, past forever, not showing an increase of 4,500,000, or 65 percent, in 3 years
to return, I suggest, Mr. President, that the amount of of increasing industrial chaos, during which leading indus­
$2,000,000,000 be drawn from the $5,000,000,000 1936 cam- trial countries abroad, such as Great Britain and Canada.
paign fund hitherto appropriated subject to the allocation of have returned to a normal condition of industrial pros­
the Executive. perity, the greatest they have known since the World War.
This suggestion will accomplish two principal objects: Eighth. Though the Supreme Court, by declaring the
First. It will demonstrate that the purpose of Congress Is N. R. A. and its huge patronage of 5,400 unlawful under the
to achieve true social security, and not merely to issue a Constitution, the administration majority repudiates its 100.
wide-spread campaign of idle promises, hullabaloo, and percent pledge in the Chicago platform to cut off useless
hypocrisy. It will start to give that security now, when it is bureaus and reduce the cost of Government "1by not less
bitterly needed, instead of passing the buck to future ad- than 25 percent."
ministrations and imposing a vast tax burden on both wage Ninth. Though the Supreme Court has performed a great
earners and employers alike, increasing steadily until 1949. public benefaction in cutting down Government costs by sev­
Second. It will materially aid the cause of the Republic, eral hundred millions in its decision that kills the N. R. A.,
the protection of the rights of the States, the protection of the administration majority deliberately chooses to ignore
Congress itself from the Federal encroachment now usurping the Court's decision and thereby repudiates- the Chicago
the legislative powers of Government, if the Executive club platform pledge for a " Federal Budget annually balanced."
of $5,000,000,000 is shortened to $3,000,000,000, and the differ- Tenth. Though the greatest bar to national industrial re­
ence appropriated to the social security of the needy and covery is the uncertainty and fear injected into the economic
the political security of the Republic. development of the country by unconstitutional " experi­
THE REPUDIATION PARTY AND ITS REMBLEM, THE BLUE EAGLE ments"1 and the "1crack-down " threats to all private enter­
Mr. President, those administration pallbearers who are prise, the administration majority persists In perpetuating
trying by the passage of this bill to resurrect the dead corpse this N. R. A. uncertainty nearly a year longer and thereby
of the N. R. A., after the nine Justices of the Supreme Court repudiates its pledge to " recover7 economic liberty ", to " re­
by unanimous decision have consigned It to the grave, place store confidence ", and to " bring peace, prosperity, and
themselves in a unique position. happiness to our people."
They brand themselves as the outstanding repudiators of Thus the administration supporters of the dead N. R. A.­
political history. upholders of the corpse which " nine out of nine"1 Justices of
First. By retaining the provision which suspends the anti- the Supreme Court have pronounced legally defunct and
trust laws, they repudiate the platform on which they and stinking-have not only defied the judgment of the Court
the President were elected, namely, their " 100 percent " and the provisions of the Constitution, but they have re­
pledge demanding- pudiated every economic plank of the platform on which
Strict and Impartial enforcement of the antitrust laws to prevent they were elected, repudiated every pretense of recovery on
monopoly, which they based their long chain of " planned emergency ",
Second. They repudiate two of the outstanding progressive repudiated the record of all previous Democratic adminis­
achievements of the former Democratic administration of trations in 50 years, repudiated the speeches and White
Woodrow Wilson, namely, the Clayton Antitrust Act; and the House promises of 3 years of industrial chaos, repudiated
Federal Trade Commission Act, even the false hullabaloo of the 11,000 press releases sent
Third. They repudiate every Democratic platform in 40 out by the publicity division of the N. R. A. and its short
years, from the second administration of Grover Cleveland official lIIIe to date.
in 1892 to the one and only administration of Franklin In short, we have here the greatest case of partisan self-
" Delaware " Roosevelt, demanding strict enforcement of repudiation known to history. Having repudiated their own
antitrust laws against monopoly, party, all their platforms, all their party history, all their
Fourth. They repudiate the Constitution which they swore former leaders, and finally repudiated themselves and their
to uphold when they took their oaths to obtain seats in own works and words-deserted all for one stinking corpse-
this Chamber, after the Supreme Court has found that the these " new dealers " of the N. R. A. today have resolved
N. R. A. is unconstitutional themselves into a new party in American history-the
Fifth. They repudiate the sovereignty of their own States, repudiation party.
which this unconstitutional N. R. A. seeks to override. The other day a mass convention of American citizens
Sixth. They repudiate the demands of 90 percent of the gathered at Springfield, Ml., the former home of Abraham
People of the United States, who overwhelmingly call for the Lincoln, who prayed at Gettysburg that " government of the
burial of the Blue Eagle and all its progeny as the greatest people, by the people, and for the people should not perish
stench that has ever revolted the American body politic, from the earth."
Seventh. They repudiate even their own speeches for na- Were it not for the vicious principle, the rotten failure,
tional industrial recovery, because the N. R. A. has been the the industrial chaos, exemplified by, the unconstitutional
chief obstacle to industrial recovery, as witness: N. R. A. Act and its exposure by the nine out of nine Justices
(a) In the first Year after the first N. R. A. code, in July of the Supreme Court, that convention might not have been
1933, the industrial production of the United States fell 25 held. This " grass roots " convention of the Mississippi Valley
percent, while the industrial production of Canada and States marked the popular revulsion of the American people
Great Britain rose 20 percent. against this corpse of the N. R. A. Other like conventions
(b) It brought on the greatest industrial strike in Amern- are to be held in Ohio, representing nine central industrial
can history, 800.000 wage earners being involved in a coun- States of the East, another at Salt Lake City representing
try-wide strike, and both leaders of the warring industrial the Mountain States, and still another representing the
factions were factotums of the N. R. A., namely, the Chair- Pacific Coast States. Similar revolt against Federal domina­
man of the N. R. A. Textile Code Authority was spokesman tion of industry is expressed by the Governors of nine States
for the employers, while a leading member of the N. R. A.. of the South.
Labor Advisory Board was President of the United Textile Here is one of the cheering patriotic signs at this " grass
Workers, both being official members of the N. R. A. set-up, roots"1 convention in the town made famous by, Abraham
and the entire strike or industrial war -sprang from the Lincoln. That assembly of 8,000 cheered the name of Alfred
N. R.L A. and was apparently designed within N. IL A. F. Smith. the Democratic standard-bearer of 1928. TheY
 1935 CONGRESSIONAL RECORD--SENATE 9539
cheered the names of the Senators of Virginia, the veteran We have received many letters of protest and denunciation, a
CARTR
ormr
G~sSGoernr
nd Brm. heycheeed 1~enumber of them threatening. because of our many factual state­
ofTEthe SenatformfrGomveryndr BYRD. ThyDcheered And ments regarding Roosevelt. A striking similarity of phrasing In-
name OthSeaofrmMrln [M.TDNS.Admistakably indicates the organized effort on the part of reds and
why these cheers from a convention presumed to be of the pinks to protect "the first Communist President of the United
Party Of Abraham Lincoln? States ', as he Is called in Russia. against adverse criticism.
hey ad rad te speche
The easo is lainenouh. rbe than a year ago we predicted that the new deal would
The easn nouh.
i plin hey ad eadthespeche beblocked when the public learned some of the facts regarding the
and watched the votes and listened to the radio messages motive behind It. Now the bars are down. A large part of the
Of these statesmen, who placed country above the party public suspicions that It has been betrayed. Roosevelt's responsi­
whip, Jefferson and Lincoln above Tugwell and Richberg, the bility for his appointments and leadership Is established. With­
out serious molestation, newspapers can now publish the truth.
nine Justices of the Supreme Court above Frankfurter and thanks to the " grass roots " convention.
Cohen, and Washingt~on, Cleveland, Theodore Roosevelt, "e'C-As OOTS" mHIGNGHTS
and Woodrow Wilson above Franklin Roosevelt, General Prom a well-known obsarver at the convention, we learn there
Johnson, and the Blue Eagle corpse and chaos, were 8,666 delegates registered from 10 States. -The galleries at all
That mass convention of the " grass roots " States had meetings were filled. As many women as men attended. A great
take
te noes f f ths aminstrtio toardmany resolutions were thrown out, none but the most Important
atitde
take
th atttud noes o of hisadmiistatio toa and significant were considered. " The new deal was indicted.
the Supreme Court and toward the Constitution, as ex- taried, found guilty, and sentenced to hang."
pressed by the President in his White House press interviews. Women will wield more Influence In the next campaign than
Those men and women of the Middle West were not blind ever before, if convention Indications hold, Women delegates were
to the White House slur, that the nine Justices of the unanimous in their denunciation of the First Lady for her political
activities and radio advertising. They pronounced her a socialist
Supreme Court had set the country back 50 years, to the and severely criticized other members of the family. It was evi­
horse and buggy " days because they had set up the Con- dent that Republican women will make Mrs. Roosevelt one of the
stittio
gudeinseadof
asther he RoseeltJohsonmajor Issues, and that they are determined that the next hoetess
stittio
gudeinseadof
asther he RoseeltJohsonof the White House shall be one who will carry out the American
codes; because they had set the principles of American lib- tradition.
erty above the edicts of a would-be dictator; because they DAMMMO EVIDECE AND A FEW QOUETIONSS
had placed the sovereign rights of the States above the Breaking of the popularity of Roosevelt Is largely due to a publie
interests of code monopolies; because they had held, as every realization of the hypocrisy and double-dealing of the man. It
court before them held for 146 years, that the legislative you want just a mild hint of his complete change of front, writ
the Republican National Committee, Washington. D. C., for a corn­
power of Congress cannot be delegated and usurped by the plimentary copy of the pamphlet "1Franklin D. Roosevelt. as Gov­
Commander in Chief of the Army and Navy to build here a ernor, Warned Against e S ­
bureaucratic autocracy as In Rome, Berlin, and Moscow. Why did Roosevelt junk the Democratic platform he was elected
grascnvetioncheeed,
roos" ot n and substitute the Socialist platform? Why did he adopt the
That is why this rs ot oveto heent " brain trust"1 new-deal program after he had vigorously denounced
only the names of Jefferson and Lincoln, but the names of control by master minds, infringement of State rights, Federal
Alfred E. Smith and the Senators from Maryland and Vir- Interference with business, and the other communistic ventures
ginl. I Iisonl
thescaed andulrepuiatrs f teirhe has promoted as President?
gini.
theseaedisonl andulrepuiatrs f teir Answers to these questions have been supplied the public by
own party and platform, afraid to voice their own true con- millions of letters, books, pamphlets, small periodicals, booklets,
victions because of that club of the $5,000,000,000 burglary, Many thousands of these pieces have been stolen from the maill
the offilceholders %waiting for their split of the greatest by " new dealers"1 in the Postal Service. To a large extent. pamph­
leteers have expressed their goods. The campaigns have been
hold-up of histori, who are unable to read the handwriting Mightily effective and have largely nullified the press censorship
on the White House wall---" Mene, mene, tekel, upharsin "- and the effects of threatened press boycotts.
weighed and found wanting! CREDIT WHERE CREDIT IS nU
On the day chosen for dragging this Blue Eagle corpse For the vast and recent change In public sentiment, craffit should
through the Senate Chamber under a gag law, insisted be given to Albert W. and Elizabeth Dilling, Gerald B. Winrod, IL A.
upon by the President himself, the Shriners of the United Jung. Col. Edwin M. Hadley. Robert E. Edmondson. Col. E. N. Sanc­
Stats
archngwre p Pnnsyvana Aenue100000tuary, John B. Trevor. John B. Snow, Miss M. R. Glenn, and many
Stats
archng wre p Pnnsyvana Aenue100000others. At great personal sacrifice, these Americans have exposed
strong. The Stars and Stripes waved everywhere, at the the communistic fallacies of the administration and the sinister
reviewing stands and above the marching ranks, and there international influence behind Roosevelt.
was not a Blue Eagle sign displayed. DEMOCRATS WITH THE NNW-DFAL Ir
And thereon hung the great news event of the day. When Fear of what the new deal will do to the party is expressed
Franklin " Delaware " Roosevelt saluted the Shriner colors as by prominent Democrats In two major ways. The movement to
pssedhisrevewig
the rocssin stndhe as om-block the nomination of Roosevelt is well started, and Is based on
the
pssedhisrevewig
rocssin stndhe as om-the fact that he has proved he Is -not a Democrat. The plan Io to
pelled to salute The Star-Spangled Banner-the flag of the have one-third of the delegates Instructed or pledged not to vote
free, the flag of the Constitution-instead of the corpse for Roosevelt. and the movement is said to be making marked
shrould of the Blue Eagle, the bedraggled rag of the N. R. A., headway in Georgia. Tennessee, Virginia, Florida, and Texas.
salvgedby
sag oo $5000,00,00.the
salvgedby $5000,00,00.This
te sag
te week, aCongressional
National secret poll of Democrats in the House was made by
Committee to determine sentiment for
Mr. President, I ask leave to print an industrial-control the 1936 election. The first question is: " What in your opinion in
report relating to the " grass roots " convention, the reaction, personally, to Mr. Roosevelt In your district?"I The
There being no objection, the report was ordered to be second deals with the reaction to administration policies, and the
pritedIn assn fllos:third
ECOD,
prined heth
ollws:poll
REORD Is: conducted
ever "1Can Roosevelt
by the carry your district?"I It Is the earliest
committee.
[Industrial Control Reports, Issued weekly by the James True OLD wnXINus A NNzW ZoTL'f
Associates. National Press Building. Washington. No. 102. June ThUntdSaeFlgAsctinsprmigadcaaio
15. 1935J h ntdSae lgAscaini rmtn elrto
,,SMAXxmsS FROMs THE "oGRAM ROOTS" of independence of today, to be signed by 50 "1outstanding Ameri-
Wasingonheppoersof
dmnisratonbot Deocrts ndcans." The announcement will be made on July 4. and the ntew
Washngtn
f teoposrs
aminitraion boh Dmocatsanddocument will paraphrase the original declaration.
Republicans, are greatly encouraged over two results of the "1grass Insiders say that since both Roosevelt and his wife are officials
roots"1 convention-establishment of the constitutional Issue, and of the United States Flag Association, they cannot understand how
the brushing aside of restraint in attacking Roosevelt personally, a conclusion was reached without removing both the blue and
Undoubtedly, the most effective feature of administration propa- the white from the flag.
ganda was its protection to Roosevelt until the recent Supreme
Court decision. More than 300 official administration press agents nxrrnia THEM SUeaxuz couMr
were assisted by thousands of socialist " fronts " and I"plants " in Apparently in opposition to the principles laid down by the
every section of the country. Reds on the staffs of papers used Supreme Court In the recent N. R. A. case, new-deal leadetrs in
their influence to the utmost. Jewish advertisers also brought Congress are making desperate efforts to Push through the A. A. A.
pressure to bear, amendments. Although new-deal legal tricksters say they have
About 60 days ago, a prominent Washington correspondent of an gotten around the decision by - rephrasing"1parts of the bill the
opposition paper told the writer that It was not safe to attack legislation. If enacted, will give the Secretary of Agriciliture SU­
Roosevplt. Published criticism brought a flood of protests from preme control of farm pro-ducts. Leaders In both Houses and
the " fronts"1 and " plants ", and their letters were received as an A. A. A. officials have admitted, insiders say, that the announce.
Indication of public opinion until their names became familiar to ment regarding cancelation of licensing power was merely a
editors. Hoaxing of the prs in this way Is an established method I gesture." There Is no doubt that the proposed legislation a
cc muit nan Socialists, unconstitutional.
 9540 CONGRESSIONAL RECORD--SENATE JUNE~la
The N. It. A. bill, considered under gag rule by the Rouse, holds Mr. McNARY. In the absenoe of the iSenator hrum south
together the Tammany political machine in a form that can be Dakota, who Is compelled to 'be away on accounit of offkicg
rapidly extended for the political campaign. It offers practically
no benefits to Industr and preserves the sinister menace of po- business, I submit the amendment which I send to thie desk.
litical control. Even In its emasculated form it la doubtful that The PRESIDING OFFICER 0Mr. BARKcLEY In the chair).
all 'rovisions of the N. R. A. bill are constitutiona~l. The Senator from Oregon [Mr. McN~ARY presents an amend-.
TAX ,mnvTS ment on behalf of the Senator from South Dakota [Mr.
We predict that the next heavy, blow dealt the new deal Will NORBECKI. which the clerk will state.
be in the form of suits to recover processing taxes. While ego- Th LEIAIV CLR.Onpg 80afelie4iti
mania still rules at the top, sane administration offcials admit TeLGSAMCEI.O ae8,atrln ,RI
that the entire A. A. A. structure is in grave danger. It has been proposed to insert the followingI.
announced that the tobacco industry will claim about $50,O0O.000.
Thursday, In Philadelphia, six packing companies filed suits In the TiL XI-NDA PENSIONS
Unitdcort.Szc.
Sate disric 1201. That heads Of families and single persons of Indian
UnThed Stateaskedistrictcut.ecletro nenlrvneb n lontOhriee otebnft fti cwohv
joined from collecting further processing taxes. The suits ar heretofore attained or shall hereafter attain the age of 65 7eams
based on the claim that the Government has no power to control are hereby declared to be entitled to a pension from the United
production, that the processing tax is not a tax as defined by the States In the sum of $30 per month. subject to the following con-_
Constitution, and that the Secretary of Agriculture should not be ditions:
granted arbitrary taxing power. Other suits for millions of dollara Applications for 'pension by persons of Indian blood shall be
have been filed In various sections of the country, made in writing in such form as the Secretary of the Interior may
prescribe and shall be filed by the applicant with the superin­
WORT-WHES
IOADCSTStendent or other officer In charge of the agency or tribe to which
Monday evening. June 17. at 6:30 (eastern standard time). Rep- the applicant belongs. Upon receipt of any such application the
resentative HAMILTON FISH. Jr., will broadcast a vitally Important Secretary of the Interior shall make, or cause to be made, such
statement on the condition of agricultural exports and Imports, investigation as he may deem necessary to determine the accuracy
His speech will be mades over the blue network of the National of the facts shown thereon, Including the annual income of the
Broadcasting CO. applicant from other sources. In all cases where the Secretary of
on June 21. at 10:30 (eastern standard time). Representative the Interior finds that the annual Income of such applicant Is leaw
MARTIN Dims, of Texas, will broadcast over the same network an than $1 per day, said Secretary shall award to such applicant a
appeal to reason regarding aliens. He wiDl advocate the Immediate pension In an amount which, when added to the other annual
passage of his bill to permanently stop immigration and deport Income of such applicant, will bring such annual income up to but
3,500,000 aliens unlawfully in this country. HimsSpeech Is spon- not in excess of $1 per day: Provided, however, That payments to
sored by more than 100 patriotic organizations. Indian pensioners entitled hereunder shall be made In equea
EXPOaRTS uAN rupoa~rs monthly installments from the date of approval of application
Recently Representative FIsH Introduced the last McNary. therefor by the Secretary of the Interior, awd, In the discretion of
Haugen bill (H. R. 8427). providing for the control and dispoi- said Secretary, such payments may be made direct to the Individual
tion of surplus farm commodities. He will explain his reasons beneficiaries or to other persons designated by the Secretary of the
during his broadcast next Monday, and following we state, some of Interior providing care for any beneficiary under the provisions of
the act tht
im Ipeled
o atemp tosav vaishng etsthis act: Provided further, That In the discretion of the Secretary
frthefctsnthats impeclledrhi trodatmtu osvcvnsin akts. of the Interior such paymeniti, due any Indian beneficiary may be
The present condition vitally affects every American business, handled In accordance with re'gulations governing individual In-
Mr. FrsH takes the charitable view that the demoralization Is due dian money accounts; and the Secretary ctf the Interior Is hereby
to mistakes of administration officiale. About 16 nonths ago we authorized to prescribe such further rules and regulations as may
emphasized certain facts which strongly indicated a deliberate be necessary for carrying out the provisions of this section.
attempt to retard recovery. Since then we have repeatedly charged Sa9C, 1202. All persons of Indian blood who are permanently blind
the wth laning o Ipovris th contr Inbut less than 65 years ~.f age shall be entitled to a pension from
dmii tatln
thdertamin eIsrti omit paningi topeimpoerish
acethbe. country - the United States In the sum of $10 per month, and all persons of
lorder fatomake isucomuisted c eperimentsou cacceptale Th o-Indian blood who have for 1 year previous to the enactment of this
lowig
ubmtte fctsare
as roo ofour hares:act been unable to perform physical labor on account of being
EVIDENCE OF OFFICIAL BADOTAGE crippled or otherwise disabled shall be entitled to a pension from
Half or more of our cotton exports have been lost. We are the United States In the sum of $10 per month during such dis­
actually Importing more wheat than we are exporting. Since last ability.
July 21.760,000 bushels of wheat have been Imported, while exports Sac. 1203. The Indians and Eskimos of Alaska shall receive a
were only 3,008.697, and the equivalent of 11,702,000 in flour, a pension under same conditions and in an amount one-half that
large part of It milled from Canadian grain. We have imported provided for Indians under this title.
11.269,000 bushels of corn, 14.084.000 bushels of oats, 9,624,000 SEc. 1204. There Is hereby authorized to be appropriated an­
bushels of barley, and 12.474,000 bushels of rye. nually. out of any money In the Treasury not otherwise appro­
During the first 4 months of this year importation of grains priated, so much as may be necessary, to carry out the provisions
amounted to $22,721,000. and during the same period of 1934 the of this act, Including necessary expense of administration.
total was $4,785,000. Wheat exports dropped from 12.174,000 to
only 57.000 bushels, Rice Imports Increased from 122.708.000 to Mr. HLARRISON. Mr. President, I have considered the
39,024.000 pounds. Rice exports decreased from 39.375,000 to amendment very carefully, and I am willing that it shall go
28,778,000 pounds. There was a net trade loss of 36.912,000 pounds to conference.
of rice during the 4-month period.
Butter Imports Increased from 217,000 pounds last year to 17.- The PRESIDING OFFICER. The question Is on agreeing
398.000 pounds for the first 4 months of this year. Importation of to the amendment.
meats Increased from 16.326.000 pounds to 38.041.000 pounds, while The amendment was agreed to.
meat exports decreased from 79.544,000 to 57.888.000 pounds. Lard
exports dropped from 166,952.000 pounds to 51,386.000 pounds dur- Mr. McNARlY. Mr. President, I am In possession of a
Ing the 4-month period. Tobacco exports for April this year were letter written to the Senator from Mississippi [Mr. HARRX­
the smallest for any month since March 1918. SON],* in charge of the bill, by the Commissioner of Indian
In 1925 exports of agricultural products reached a total of about Afis
one billion and a half dollars. In 1934 exports were $733,416,000- ~fs hc hc h
h eao rmSuhDkt
eao rmSuhDkt
less than half. Authorities estimate that agricultural exports for BECK] desired to have me offer for the RECORD; and I ask
M.NR
M.Nx
thiillnotexeed$50,00,00.The
yer 1925 figures are based unanimous consent that It may be printedfoown th
on a sound, 100-percent dollar. The decreased figures are in the action on the amendment.
depreciated 59-cent dollar. Based on the old sound dollar, the
value of this year's farm exports will not exceed $300oo,000,00-one- There being no objection, the letter was ordered to be
fifth of agricultural exports for 1925. printed in the RzooaD, as follows:
These figures are but a smalil part of a large number which JWU 17. 193L.
point to the same Inevitable conclusion. The new deal planned Ho,,, PAT YI1AaIsOlq.
ruin of the country's agriculture is almot complete, and during United States Senate.
the process the administration stealthily Increased its communistic Dzax SENATOR MARsoN: I have talked with your sectary. Mr.
control. The only success of the adiministration Is Its deliberately Calhoun. about the proposed amendment to the Securities Act
planned demoralization, providing for pensions for aged Indians.
Mr. HARRISON. Mr. President, there is to be no other I am In sympathy with this proposal, and I call attention to Its
discussion of the pending amendment th~is afternoon, I modest character. These aged Indians will receive from the GOu­
ermient a suI31cient monthly pension to bring their total income
Undertandto a dollar a day. The possibilities of abuse under the terms of
Mr. McNARlY. Does the Senator from Mississippi desire the proposed amendment would be minimizedi. Most of these aged
to have me Present at this time the amendment nbhl Indians. insofar as tLey receive incomes at all, receive them from
of heSeatr
fomSoth~ot tNOIn] behplf perties under the jurisdiction of the Government and In the
wait mtiltomorowform of payments out of individual accounts held In trust. This
I wat unil omorowfact means that the Interior Department, through Its local super­
Mr. HARRISON. The Senator may offer 'the amenden linteudencies, would know with considerable exactness the tncomO
now. I should like to clear up as many of th nlt already being received by each of these old people.
I should add that a large percentage of them ame now receiving
oli ttle income or none at aIll Many of these old Indians posee no
 1935 CONGRESSIONAL RECORD-SENATE MI4
land any More Others wre In possessi on of allotments not yet Mr. HARRISON. I am sorry the Senator places that In-
alienated, from which the regular income Is Uffiling. Often their trrtto ni.Tewrigi sflos
lafldh &%insae slit through numerous heirship proceses-lands~ aino t h odn saflos
whchv cme subdivided through the pernicious allotment (b) The term I"employment " means any service. of whatever
system to that point where they can no longer be profitably rented nature, performed within the United States, or as an officer or
or farmed. These old Indiats now subsist at a near-starvation member of the crew of a vessel documented under the laws of tae
level through such help as relatives may be able to give them and United States, by an employee for his employer. except-
through the very inadequate rellef grants niow made to the Indian . . . .
Office. (6) Service performed in the employ of a corporation, corn-
I shOUld add that these old Indians are the best of their race. munlty chest, fund, or .oundation. organized and operated Wxini­
and I believe every Amnerican feels that the Government ought not aively for religious, charitable, scientific, literary, or educational
to let them starve nor leave them dependent upon uncertain local purposes-
Charity. Usually they do not have access to the relief sources
which Imperfectly meet the need of aged white people. And so forth.
Whtprrbable liability will the amendment place upon the GT rCAK Ufruaey ehpteTesr e
enetrThere are about 14,000 Indians aged 60 years and over, par.n doesK Unfotrsytumately teheawso the UitedsrStaes
about 11.00 aged 85 years and over; about 9,325 aged 70 yearsPrmn osnta e aetelw fteUie tts
and over. The maximum theoretical liability for the group 6o The Supreme Court within the last 2 or 3 weeks said that the
years and over would be $4,260,000 a year. I would estimate Congress still functions. While I have no objection to this
roughly that two-thirds of the total of those 65 years and over amendment, which simply provides another exemption to
(11,900) woulP1 be entitled to some aid, and that on the average
this two-thirds (7,900) would become entitled to pension at the those already in the bill, it certainly gives the lie to the argu­
rate of 66% cents a day. This would mean an annual cost to the merit which has been made here all afternoon by the sponsors
Government of about $1,925,000. You will understand that this of the bill, the Senator from Mississippi [Mr. HARRISONsl, the
Is a merest estimate and that In time of drought and of business S
depression the required amount might be larger, while In goo Senator from New York [Mr. 'WAGNERI, the Senator from
times It would be substantially smaller. Wisconsin [Mr. LA FOLLE`TTEI, and others, that to put ex-
Sincrel
yors.JOHN COLLIER, Co"mmisstolw5 emptions in the bill would Invalidate the measure. I shall
) not object.
Mr. HARRISON. Mr. President, I offer two clarifying Mr. HARRISON. Mr. President, I desire to say only a
amendments, word. The amendment does not, in my opinion, add any-
The PRESIDING OFFICER. The Senator from Missis- thing to what is already in the bill. It Is a clarifying amend­
sippi offers amendments, which the clerk will state. ment, and for that reason it was offered.
The LEGISLATIVE CLERK. On page 29, line 1, after the word The PRESIDING OFFICER. The question Is on agreeing
"State "', it is proposed to insert the words " and its political to the amendment of the Senator from Maryland [Mr.
subdivisions." RADCLIFFE].
The amendment was agreed to. The amendment was agreed to.
The LEGISLATIVE CumRK. On page 33, line 23, after the Mr. McNARY. Mr. President, I think I shall take this
word "1State "1, it is proposed to Insert the words " and its opportunity to say a. few words on one section of the bill
political subdivisions." Particularly that which applies to old-age pensions.
The amendment was agreed to. For many years I have been very much interested in the
Mr. HARRISON. I offer another amendment, to be ln-~ Philosophy of legislation of this character. in reviewing a
sertod at three places in the bill, few days ago some of the bills, I found that on August 15,
The PRESIDING OFFICER. The clerk will State the 1919. I introduced a bill which provided a pension for those
amendments. who had reached the period of old age.
The LEG;ISLATIvE CLERK. On page 8. line 1, It is proposed Today we are considering a plan directly affecting mU2­
to strike out the words "1Secretary of the Treasury"I and lions of our citizens-so many, in fact, that they outnumber
to insert in lieu thereof the words " Social Security Board." the combined populations of Arizona, Delaware, Idaho. Mon-
The amendment was agreed to. tana, Nevada, New Mexico, North Dakota, Rhode Iksland,­
The LEGISLATIVE CLERK. On page 8. line 4, It is proposed South Dakota, Utah, Vermont, Wyoming, the District of
to strike out the words "1Secretary of the Treasury"1 and Columbia, and Alaska.
to insert in lieu thereof the words " Social Security Board." The problem which we are called upon to face In the care
The amendment was agreed to. of our dependent aged grows more acute with each year.
The LEGISLATIVE CLEMK On page 9. line 10, it is proposed Within a century man's expectancy of life has jumped froma
to strike out the words " Secretary of the Treasury " and to 39 to 60 years, so that in 1930 those over 65 years of age
insert in lieu thereof the words "1Social Security Board.' represented more than 5 percent of the entire population, a
The amendment was agreed to. percentage double that of 1850.
Mr. RADCLIFFE. Mr. President, I offer the amendment. We cannot lightly approach any plan touching so large a
which I send to the desk. number of our citizens. For good or ill, dependent wholly
The PRESIDING OFFICER. The amendment will be upon the ultimate soundness of our program, our decision
stated. will affect the entire economic, social. and perhaps political
The CHIEF CLERK. On page 15, line 22, after the word life of the country. The cry for old-age pensions, delayed
"literary ", it Is proposed to strike out " or educational " though it has been in the United States. is now challenging
and to insert in lieu thereof " educational or hospital." the attention of the country as never before.
On page 52, line 4, after the word " literary ". it Is pro- Wrapped in our own affairs, we have gone our separate
posed to strike out " or educational " and to insert in lieu and indifferent ways until conditions have become so acute
thereof " educational or hospital." as to compel a wide-spread realization of an indefensible sit-
On page 61. line 22. after the word " literary "1, it is pro- uation. Now an awakened and aroused public opinion
Posed to strike out the words "or educational" and in lieu clamors against this existing evil, and few are left suffi­
thereof to insert " educational or hospital." ciently entrenched in selfish interests to remain calloused to
Mr. HARRISON. Mr. President, I have examined this the call oif humanity, or to dare ignore the challenge of an
amendment. Many charitable hospitals have been held by enlightened remedy.
the Treasury Department to be exempt, and this Provision of There are some who attribute this to clever and appealing
the bill is in the same wording as the present law. propaganda; but the demand for decent care for our de-
Mr. CLARK. Mr. President, what is the purpose of the pendent aged is rooted in the fundamentals and ideals of our
amendment? democracy, and of late years has been intensifled by our
Mr. HARRISON. There are certain charitable hospitals rapid mechanization and industrialization.
which under the wording of the bill are already exempt. A century ago problems of old age from the economic
Mr. CLARK. According to the great argument the Sena- standpoint were not so acute nor so sharply defined as today.
tor from Mississippi [Mr. HARRISON) made this afternoon, as The man of 50. 60. or 70. growing more adept at his trade,
well as the Senator from New York [Mr. WAGNER], this handled his simple tools skinlfully; and if advancing years
amendment would impair the constitutionality of the bill, laid a restraining, hand- on his shoulders, they also bestowed
 9542 CONGRESSIONAL RECORD-SENATE JuNE 18
the benediction of experience, trustworthiness, and dependa- Of this group some will have a few hundreds more, some
bility which youth does not always possess. So the elderly nothing at all, and many will be In debt, but the net answer
man had his place. The whir of the accelerated motor. the Is the same. More than half of our people cannnot, out of
machine which, serving man, demands perfection of eye and their meager earnings, set aside any substantial amount
muscle of him who serves it-these did not yet constitute a against the years of unemployment and old age,
challenge to his efficiency. On the farm, in the simple work- We find, then, in our modern industrialized society these
shops, in the fields, driving the vehicles of those days on two related causes of old-age depindency, neither of which
rude but safe highways, the worker of yesterday did not find surely. can be charged to those who suffer from them most:
It necessary to clutch with a life-and-death grasp the Job Foremost, low wages which prevent accumulation of any
which gave him independence. degree of wealth, and its close associate, the refusal to
The women also had their place.. The mother found many emiploy those who have passed youth and middle age.
things to which her willing hands could turn in the homes of Various industrial studiles made within the last 10 years
yesterday, with the younger generation coming on apace and plainly indicate that only a few of our workers have
no labor-saving devices to lighten the burden. Families earned enough to maintain a moderately high standard of
were larger in those days. Teewrmoecidntoliving, and not only have earnings fallen short of this in
share the expense of maintaining the older generation when good times, but during pertods of depression they have been
it ceased to be financially independent. insufcient to supply even the minimum necessities. It Is
Again, in the last decade we have turned sharply from conceded by most students of the problem, including the
agriculture to industry. Forty-five years ago nine and one- foremost authorities In this field, that the major factor
half million of our people were engaged in agriculture, top- for poverty in old age is the low wage scale. I may
ping by more than a million those found in mining.11,1manu- say that an examination of this class shows that small
facturing, transportation, and trades. But in 1920, 30 years earnings and dependency in old age maintain an Inseparable
later, agriculture claimed only 11,000,000 as against 21,000,- relationship.
000 in the other fields of endeavor, and in 1930 there was A year ago a study by the Brookings Institute entitled
an actual decrease in the number of agriculturists, as against "America's Capacity to Con-ime" startled us by Its statis­
25,000,000 in the industrial groups. In other words, in 1890 tics concerning the number of families and workers who,
a greater proportion of our people were engaged in agricul- because of the small return for their labor, were compelled
ture than in any other business activity. Since that time, to exist far below our accepted American standard.
and up to 1930, agriculture has barely held its own, whereas A series of charts on family and individual Incomes Is fol­
the industrial group has practically trebled itself.loebytiexanorlngg:
This, of course, has a direct bearing on old-age depend- Tohed bygthis explanatorye langucagt e:elI tikn a h
ency
dd te Noedery
ony ma an woan inda nchewide disparity in Incomes, and also the concentration of the great
in the agricultural pursuits, but the struggle for shelter and bulk or the families in a relatively narrow Income range. The
food was not so exacting on the farm as in the crowded greatest concentration or famulies was between the $1.000 and
cities to which industry, has drawn our people. Every time $1,500 level, the most frequent Income being about $1,300. The
man'
eniu
man'
inentve
eniu
costrctsanoher abo-saingde-following summary statement will aid In showing both the range
inentve
costrctsanoher abo-saingde-and the concentration that exists:
vice, more men and women walk the streets with empty Nearly 6 million famnilies, or more than 21 percent of the total.
hands, and the blight falls first on those of matured years. had income less than $1,000. About 12 mIllion famnIlie, or more
But to damn the machine is futile, since progress is inevita- than 42 percent, had income less than $1,500. Nearly 20 million
bleandshold
ee wlcoe. everhelssit s esenialfamilies, or 71 percent, had income less than $2,500. Only a little
bleandshold
wlcoe. everhelssit s esenialover 2 million families, or 8 percent. had income In excess of
that we adjust our economic life to our new industrialization $5,000. About 600,000 families, or 2.3 percent, had Income In ecs
and mechanical advancement; and when we care for the of $10,000.
aged we have taken one necessary step in that direction. In the face of this cold statement of facts, no argument
Not alone have we become industrialized as a nation, but Is needed to establish our responsibility toward those who
we boast an industrialization pitched to the highest degree find themselves at 60 or over without adequate savings. If
of efficiency, specialization, and speed. Added to this there anything is needed to strengthen this recognition, let us turn
is the abominable practice, rapidly increasing, of placing an again to the study of our wealth distribution for an analysis
employment deadline somewhere between 35 and 50. In of surveys during the same period:
1929 the National Association of Manufacturers, after a Sur- Sixteen and two-tenths million families with Income from zero
vey, revealed that 30 percent of the concerns investigated- to $2,000 (59 percent) show aggregate savings of about $250,000,000.
the large corporations chiefly--operated under set age 8.9 millIon families (32 percent) with Income from $2,000 to $5,000
limits, the most accepted limit for unskilled workers being saved approximately 3.8 billion dollars. Two million families (7
45
45years of age: for skilled workers, 50 years of age.
percent) with Income from $5,000 to $20,000 contributed about
4.5 bIllion dollars of the aggregate savIngs. 219,000 families with
Now, if it were possible, in this land of abundant natural income above $20,000 saved over $8,000,000,000.
wealth, for the majority of our workers to earn enough to About 2.3 percent of all families-those with Incomes In excess
accumulate a surplus for their latter years, this condition of $10,000-contributed two-thirds of the entire savings of all
mighragc.
no beso utof curs, i th cae o atfamilies. At the bottom of the scale 59 percent of the families
mighragc.
no besoutof curs, i th cae o atcontributed only about 1.6 percent of the total savings. Approxi­
least half of those employed this is utterly impossible. The mately 60.000 families at the top of the income scale, with Income
Brookings Institution, in its survey based on conditions In of more than $50,000 per year, saved almost as much as the $25,­
1929. found that about 40 percent of income recipients re- 000,000 families (91 percent of the total) having Income from
ceived incomes less than $1,000. The average income waszeot 50.
approximately $1,200. Going by slowly ascending step to, Thus, it must be evident to the most determined irsdivldu­
an annual income of $2,000, we find that less than 19 per- alist that in most instances old-age dependency In the United
cent of our people receive in excess of this amount. These States is not due to individual maladjustment, but to social
figures were calculated, not on conditions in one of our de- and economic forces which the individual cannot hope to
pression years, but in our so-called "'boom" year of 1929. govern
when we as a people were supposed to be cradled tn luur To present a problem is much simpler than to present its
and abundance. When we consider the exigenc~es of life, solution. Yet I am confident that once the magnitude of
the inevitable periods of unemployment and illness, the this problem is clearly recognized, once we face squarely the
losses and the costs involved in these and In other accidents fact that it has passed beyond the ability of the Individual
and hatzards, -we are putting It optimistically if we assume to master, and is distinctly national in its character, we shall
that even 40 percent of our people are able to accumulate set ourselves to the task of its solution. It does not square
a substantial and adequate savings account. As a matter with our sense of fair play and honorable acceptance of
of record, 16,000,000 families, comprising about 59 percent of responlsibilities to flinch and turn a cowardly back upon out
all our families in the United States, in 1929 had aggregate duty.
savings of about $250,000,000 only. This amounts to about In Wisconsin. where there was an opportunity for voters
816 per family, to regIster their convictions, they voted In 1931 to change
 1935 CONGRESSIONAL RECORD--SENATE 94
the law from optional to mandatory form. and Minnesota
followed suit in 1933. Six of the 13 laws enacted between
1931 and 1933 set the pensionable age at 65 years instead
of 70. Since the beginning of 1935 seven States have enacted
laws affecting old-age pensions. In every instance the trend
has been toward liberalization such as reduction In age limit,
lowering the residence requirements, or making the obliga­
tion of the counties mandatory.
I do not claim that an old-age pension alone will bring to
this country a full solution of its pressing problems; but It
Is an important, righteous forward -step.
Both the farmer and the business man should profit by
the application of a generous pension plan, greatly in excess
of whatever share of the financial expense may fall upon
them. If It is feasible to spend billions of dollars to lift
Industry from its prone position and start it again into Its
stride, it is feasible to expend money in this just cause with
the expectation that it will carry out the second part of Its
twofold purpose, namely, to stimulate the purchase of our
so-called " surplus commodities " by assuring for them a
fixed and balanced market.
No less a beloved citizen than Abraham Lincoln has said:
Inasmuch as most good things ame produced by labor. It follows
that all such things ought to belong to those whose labor has
produced them. But It has happened in all ages ot the world
that some have labored, and others. without labor. have enjoyed
a large proportion of the fruilts. This la wrong and should not
continue. To secure to each laborer the whole product of his
labor as nearly as possible Is a worthy object of any good
government.
Those who are devoting themselves to the cause of good
government can take this means of assuring to our workers.
in their old age at least, the products of their labor of earlier
years. Thus, there shall be happiness and peace in homes
now darkened with despair, and in serving the cause of good
government we shall serve the cause of democracy and
humanity its well.
 June 19', 1935
1935 CONGRESSIONAL RECORD-SENATE 9625
who ame citizens of the States are citizens of the United
States; and I look upon our National Government rather as
a benevolent organization than as a ruthless organization
seeking all those whom it may devour. Certainly In its effort
to relieve economic insecurity by providing some universal
and uniform way by which we may eliminate the hazards of
old age, of unemployment, and of illness, our National Gov­
ernment takes on the qualities of a benevolent government
and not of a despotic or ruthless government.
We have had our attention called to the decision of the
Supreme Court in the famous case sometimes referred to as
the "sick chicken " case, sometimes as the " chicken coo"
case, and other derisive terms which have been applied to it
I think it is unfortunate that the decision as to the legality
of N. R. A. had to arise on a case involving the plucking of
chickens out of a coop, because It seems to be a trivial situa­
tion; but the Supreme Court went into it in detail and there­
fore I1have no disposition to treat It in a trivial way.
I believe there is no question that the Congress baa the
power to levy the tax which Is proposed to be levied under the
pending bill. I am not concerned with fear as to the consti­
S(OCUL Son- tutlonality of title HL which can only be doubted on the
The Senate resumed consideration of the bill (H. R. 7260) ground that we are invading a field which was reserved to the
to provide for the general welfare by establishing a system States or the people; but I do not see any difference In prin­
of Federal old-age benefits, and by enabling the several ciple between appropriating billions of dollars to be given to
States to make more adequate provision for aged persons. unemployed men and women all over the United States In an
dependent and crippled children, maternal and child weI- emergency to keep them from starving and freezing and
fare, public health, and the administration of their unem- appropriating money out of the Treasury in an orderly way to
ployment-compensation laws; to establish a Social Security provide against the existence of such an emergency in the
Board: to raise revenue; and for other purposes. ftr
The VICE PRESMDENT. The question is on the amend- We need not grow fearful that the foundations of our
ment offered by the Senator from Missouri [Mr. CLAM].I Government are going to crumble because the Supreme
Mr. BARK=E. Mr. President, the amendment which Court on one day rendered three decisions, two of which
has been offered by my friend the Senator from Mis nullifiled acts of the Federal Congress, one being the N. R. A.
[Mr. CL~AW Is to be voted on at 1 o'clock, an insmc case. the other involving the Frazier-Lenike Act, which was
as the Senator from Missouri desires to conclude the argu- passed by Congress has and was not, strictly speaking, a part of
aendent'X'Domied
menton is wn im nt t ocupythe new deal, as it been assumed that all' these decisions
all the time; and I have no desire to do Itindependent of wr edrdaanttenwda n h hr aigt
that in order that I may extend to him the courtesy to do with exercise of the power of dismissal on the part of the
which he is entitled as the author of the amendment. President.
There are so many things Involved in the amendment It might be interesting for Senators to, recall that from
which is now tefore us that I could not hope to call atten- 1789 to 1859 the Supreme Court rendered only 2 decisions
tion to all of them in the space of time which I sialocupy. nullifying acts of Congress. From 1860 to 1869 it rendered
We have heard a good deal of discussion here on the pending 4 decisions nullifving acts of Congress; from 1870O to 1879
bill and in connection with the amendment, in which the It rendered 9 decisions nullifying acts of Congress; from
fear has been expressed that the bill Itself Is of doubtful 1880 to 1889 there were 5 such decisions; from 1890 to 1899
constitutionality, and the intimation Is that we ought to there were 5 such decisions; from 1900 to 1909 there were
vote against it on that account. 9 such decisions; from 1910 to 1919 there were 7 such de,.
M. Prsidnt-cisions;
Mr. ORA. from 1920 to 1929 there were 19 such decisions;
The vICE PRESIDENT. Does the Senator from Ken- from 1930 to 1932 there were 3 such decisions: and from
yild t th
tuckSentorfromIdao? 933 to 1935, both inclusive, there were 7 such decisions,
t r.Bc KLEy yield.t
h eao rmIao which involved only 6 acts of Congress. So that from 1920
Mr. BORAE. The fear, as I understand, Is with refer- to 1929, a period of 10 years, the Supreme Court nullified,
ence to title 1H; but does not the Senator think that title TT in all 19 decisions, acts of Congress, but no one was then
mgtbe held to be unconstitutional without affecting th fearful that because of that fact Congress had ceased to
moghepotioso h i function or that the Supreme Court had arrogated to Itself
Mr. BARKLEY. Yes; I think the various titles of the bill the powers of government.
are separable. The point that I have in mind at th~is par No one thought the foundations of our Government were
ticular juncture Is that, if It be true that there Is any part about to crumble; yet because during the last 5 years the
of this measure concerning the constitutionality of which Supreme Court ha.q rendered 10 decisions in which it nulli­
there is doubt, that doubt ought not to be increased by fled acts of Congress, 7 of which have been rendered within
adding an amendmenit such as that which is now before the last 3 years, we are cautioned not to vote for anything
the Senatle. that even implies a position near the border line. lest we may
We have heard the Federal Government berated and de- do something that is unconstitutionaL
nounced here on the floor as if it were a sort of monster; we Mr. President, my objection to the Clark amendment is
have heard it talked about as If It were a sort of glacier, that It sets up two competitive systems of old-age relief, I
gigantic in proportions, crawling along the surface of the believe one of the wisest things the Nation has done has been
earth and crushing everything with which It comes In con- to recognize the duty of the Government toward Indigents.
tact, and that, because it Is a monster, because it is constantly Whether the Indigent condition be brought about by unem­
reaching its hands out to crush somebody or to rob somebody ployment or old age or HI health, there Is no way by which
of authority, we ought to vote against this measure and all the public Can escape the burden. It Is always present in
simila measures which are brought forward for our con- one form or another. Those who work must support those
sideration. who do not work. It has always been so, and It will always
I do not entertain that conception of the Federal Govern- be so. With respect to reduction of hours of labor. my theory
ment. The same people who pay taxes into the State tress- has been that if we must decide whether all our people should~
Uries pay taxes into the Federal Treasury; the same people be allowed to work three-fourths of the time or three-fourths
 9626 CONGRESSIONAL RECORD--SENATE JUNE 19
of them should be allowed to work all the time and the other try, and I belong to a political organization one of whome
one-fourth never work at all, I prefer the first alternative cardinal doctrines has always been the preservation of the
so as to divide whatever work is available among all the able- rights of the States. But while I am in favor of State
bodied men and women of the country who desire to work, rights, I am also opposed to State wrongs.
so they may share it in proportion to their ability, rather We take nothing away from any State in this measure.
than that we shall have a permanent condition in this coun- There is nothing here which interferes with the right of any
try in which three-fourths of the people shall be allowed to State to pass Its own old-age-pension laws and its own old-
work all the time and one-fourth never to work at all, and age annuities or any other form of old-age relief which the
theref ore become burdens upon the three-fourths who shall State legislature, through the representatives of the people,
be allowed to work. That is the reason why I favor reduc- may desire to enact. We not only take away, from the
tion in hours of labor, insofar as we can do that, in order to States no right which they enjoy but we take away from no
spread the work which is available among all the people capa- employer any, right which he enjoys. He may continue lia
ble of working. Private Plan if he desires; and if he Is so generous as not
I feel the same way with respect to the provisions for old- to be satisfied with what the old people who work for him
age pensions and unemployment insurance. That is why, I or his concern for the able-bodied years of their lives are
believe in this measure, worked out by a commission ap- to get out of this bill, he may supplement that by adding
pointed a year ago by the President at the time he sent his to it, or inaugurating a private system of his own which
message to Congress announcing that at this session he will give them more than they will be able to obtain under
would propose a constructive plan of legislation to deal with the bill as we have it here.
this complicated and interrelated situation. After months of MY contention is, however, that we cannot safely take
investigation and months of labor that commission brought away from this uniform, universal system which we are try-
out a tentative plan, which was submitted to the Houses of Ing to establish here the universality and the uniformity of
Congress, and both Houses, through their committees, held its application by holding out an invitation or an encourage­
exhaustive hearings on the subject. The House of Repre- ment to private individuals to impinge upon the system set
sentatives finally passed a bill, I believe, in much modified up by the Federal Government, and utterly to destroy its
form. Our Committee on Finance gave weeks and months reserve fund, and thereby break down Its application, be.
of study to this problem, and has brought here a bill propos- cause the Federal Government will be compelled to bear the
Ing a uniform and universal plan to apply to our country, burden of It on the seamy side, while private employers may
Abraham Lincoln once said this country cannot endare so manipulate their employment as to age as to have a large
half slave and half free. I do not believe any old-age pension majority of younger men who would not be an immediate
system we may inaugurate can long endure half public and burden upon them, while shifting to the Federal Govern­
half private, because if we have private insurance or annuity ment all of the older employees whom they do not desire
plans set up in opposition to the plan of the Federal Govern- to carry on their rolls because of the greater burden that
ment, it is not difficult to see that the high-pressure sales- might be attached to payment of annuities to them overa
manship of annuity companies and of Insurance companies term of years
will always be on the doorsteps of the employers to convince Mr. COSTIGAN. Mr. President-
them that they can Insure their employees in a private sys- The PRESIDEN'T pro tempore. Does the Senator from
tern more cheaply than they can by the payment of taxes Kentucky, yield to the Senator from Colorado?
into the Federal Government and a consequent dispensation Mr. BARKLEY. I yield to the Senator from Colorado.
of the benefits in an orderly and scientific fashion. Mr. COSTIGAN. r am much impressed by the statement
Therefore I believe the effect of the Clark amendment-o-nd of the Senator from Kentucky. In connection with it, I ask
I am sure, of course, the Senator from Missouri was not actu- his attention to the proviso on page 4 of the Clark amend­
ated by any such design or desire-will be to disorganize and ment, to which, as I view the amendment, not enough
disarrange the reserve fund set up in the Treasury under the attention has been directed.
Federal plan, and that it will gradually and effectually under- Under that proviso, with which the senator irom Ken.
mine the Federal system which we are trying to set UP. We tucky doubtless is familiar, if an employee leaves private
will then have our Government In competition with every employment prior to reaching 65 years of age, the duty falls
annuity writer and every employer in the country who thinks upon the employer to pay to the Treasury of the 'United
he may be able to save a little money by Insuring his em- States an amount equal to the taxes which otherwise would
ployees or by adopting some private annuity plan which may, have been payable by the employer, plus 3 percent per
be 'suggested to him by some Private insurance company or annum, compounded ainnally. Since we are dealing with
annuity company which desires to obtain the business, insurance principles, is the Senator prepared to tell the
As the Senator from Wisconsin [Mr. LA FOLL~ETTal Said senate why the payment to be made at such a time Is not
yesterday, the employers of the United States have not based on actuarial standards, which would result in a larger
asked for this amendment. only one emplcoyer of labor payment by the employer than the amount provided for In
came before our committee and suiggested it. He was a the Clark amendment?
representative of the Eastman Kodak Co., of Rochester, Mr. BARKLEY. Of course, I am not able to answer the
N. Y., which for many years has had a very commendable question of the Senator, because I do not know why it was
system of Private annuities for Its employees. The only not based upon actuarial facts and upon actuarial Investi­
other man who came b4efore the committee to suggest the gations.
amendment was a man who represents an annuity, company Mr. CLARK. Mr. President, will the Senator yield?
which desires to write policies for employers throughout Mr. BARKLEY. I yield.
the United States. Mr. CLARK. I do not desire to take the Senator's time;
The question which we are to settle when we vote on the and I shall be glad to have the Senator make up out of miy
Clark amendment at 1 o'clock is whether we are to have a time the amount of time consumed by this interruption.
Federal system uniform in its application all over the United The question Is very simple to answer. The provision was.
States or whet1uat we are to have a spotted system, part included in that form to meet the objection which was made
Federal and part private, in the committee that the employee might be the loser at
The argument haS been advanced here that fallure to any time by transferring from a private fund to the Gov­
adopt the amendment would rob the States of some right,- ermient fund. The provision was put In the amendment
to which they are entitled. The argument has even been In this form to Insure that an employee who, either from
made that the enactment of this bill into law wIll rob the his own wishes or from any other cause, tzansfers at any
States themselves Of some right under the theory of State time from a private fund to the Government fund will cer­
rights. I believe In State rights. 'I Was schooled in the tainly not be any worse off than if he had been in the
doctrine of State rights, I come from a section of the coun- Government fund all the ttm..
 1935 CONGRESSIONAL RECORD-SENATE 9627
Mr. BAiRKLEY. That leads me to discuss another matter But, regardless of constitutionality, regardless of any
which I thinkc is very serious and will be very difficult to question of technicality, regardless of all the legal tech­
administer. nicians who mar be brought forward in behalf of this pro­
The amendment of the Senator from Missouri provides, posal, my earnest belief is that it is unwise as a matter of
of course, that the board shall approve these plans. It policy to divide this great scheme which has been devised
must keep constantly In touch with each of them, not only in our country-a belated scheme, I will say, compared to
as to the plan as a whole but as to every single employee the legislation of other civilized nations, some of which was
of any concern, however large the number may be. In inaugurated half a century ago, most of which has been in
other words, if the employment of any man is terminated operation for a quarter of a century. It has taken us a,
Under the terms of this amendment, whether by his own long time to march up the hill toward the consideration of
voluntarily act or by the act of his employer, the board in our duty to those who have served society, and in many
Washington must investigate the relationship of that em- cases have rendered as valuable service to the world as the
ployer to that employee; and it is conceivable that it would man who shoulders a musket or goes to war in support of
take an army of inspectors and investigators running all his flag or his Constitution. It has taken us a long time to
over the United States to innumerable places to which they conceive of it as our duty as a government to do something
would be called every time a man terminated his employ- to recognize, in an organized and regular and orderly way,
nment, either on his own account or on account of his em- the duty of society to its aged and to its unemployed and
ployer, to ascertain the relationship between the employer to its indigent, those who have served their day and have
and the employee at the time of the termination, and at passed on beyond the power of service, beyond any capabil­
the Same time investigate the employee's rights under the ity so far as they are concerned to make their declining
private plan and under the Federal plan, if he had any years happy and comfortable. I congratulate the Congress
rights under the Federal plan, of the United States, I congratulate the American Govern­
Talk about bureaucratic government, and about snoopers ment, I congratulate men of both political parties in this
going around all over the country to investigate everything! Chamber and in the other Chamber, that at last we have
There would have to be an investigation, if there was any come to recognize the fact that society as a whole, in its
controversy over it, every time a man quit his work or was organized form, owes an obligation to these men and women
discharged, as to his rights under his agreement with his which cannot be discharged by mere lip service, but can be
employer, or under the law under which he operated. discharged in a practical way only by the enactment of
That brings me to the discussion of another madter which workable, practicable plans to apply to all alike and to aUl
seems to me to add to the doubtful constitutionality of the sections of the country with equal force, as we have at­
bill if this amendment should be adopted, tempted to provide in the bill now before the Senate.
In the child-labor case the Supreme Court practically held I think the Senate and the Congress will rue the day on
that an effort on the part of Congress to levy a tax on the which this amendment shall be agreed to, and thereby the
products of a factory intended for interstate commerce, pro- strength of our enactments be weakened, and the power of
vided they employed children in the manufacture of the the National Government be weakened in dealing with un­
product, was the same as fixing a penalty upon any concern employment and old-age problems.
that employed child labor. They held that that was uncon- For these reasons, I sincerely hope the amendment will
stitutional for that reason, as well as for other reasons be defeated. However much I regret to oppose any amend­
which they assigned. ment put forward by my'lifelong friend the Senator from
in the case of this amendment, if the same controversy Missouri, however much respect I have for his views and
should arise, and the Court should take the same view of it- for the sympathetic heart which I know he possesses, never­
that the tax imposed here would be in the nature of a pen- theless, I believe he is wrong In principle and in policy in
alty against every concern that did not have a private plan this case, and I believe it would be a serious mistake to
of annuity for the benefit of its employees-of course, the adopt the amendment; and I, therefore, trust that it will be
act might be held unconstitutional on that ground. rejected.
To me, however, there is even a more serious objection MrCAK M.Pesdnocafuaditligtob
to the amendment on constitutional grounds. The Constitu- MrCLR.WPesdnocafuaditligtob
tion provides that all duties, imposts, and excises shall be server in these unhappy times can have failed to note
uniform throughout the United States, Of course, that does that in,'the last 10 or 12 years there has been an essential
not mean that we have to levy a given tax on everybody in change, If not In the form of our Government, at least in
the country. We have always recognized the right of Con- its substance, and can have failed to observe that this has
gress to establish classifications for the purposes of taxa- ceased to be a government in which legislation is by con­
tion. We do it in all of our revenue laws. We set up classes gressional consideration and vote, but has become a gov­
which shall pay a certain amount of taxes, and other classes ermient by experts.
which according to the law will be taxed in a different way; There was quite a long period following the foundation
but I do not recall any act of Congress or any decision of a of the Government down to a recent date when Senators
court where it has been. held that after fixing these classifi- and Representatives considered it their duty under the
cations Congress can lift some persons out of the classifica- Constitution to formulate legislation on their own respon­
tions and exempt themn from taxes altogether. That is what sibility, under their oaths of office, to consider that legisla­
this amendment would do. It says to every concern and tion in the light of their own views, and to cast their votes
every factory, it says to all those who are subject to it, "1You on the enactment of the legislation in accordance with those
will pay this tax unless you inaugurate a private annuity views. That situation existed until a period not so long
system of your own. If you do that, you are not required to ago. During that time Senators and Representatives con­
pay the tax which everybody else in your class will be re- sidered It to be their duty to take active part in the formu­
quired to pay." lation of legislation. But under the system which has
I seriously doubt whether Congress has any such power as grown up in the last 10 or 12 years, a man who feels him­
that under the Constitution. Certainly, in my judgment, self qualified to participate In the formulation of legisla­
that would violate the rule of uniformity which the Consti- tion, to have any voice in its formulation, should not offer
tution requires with respect to taxes levied upon all classes himself for election to the Senate or the House of Repre­
and different classes which Congress proposes by its laws s~entatives, but he should procure for himself a Position as
to attempt to tax. Certainly there would be enough doubt a member of some commission, or as an employee of some
about it to add to the doubtfulness of the constitutionality commission or as an employee or agent of some bureau of
of the act as a whole, if there is any serious doubt as to its the Government.
constitutionality, which I have not the time now to argue Until very recently these experts were satisfied to go
at length, because I have promised the Senator from over legislation proposed to be enacted, In private, with the
Missouri to leave him 20 or 25 minutes in order that he Senators who were to introduce It and sponsor it and
may close this argument in behalf of his own amendment, quietly to let It be known that It was legislation sponsored,
9628 CONGRESSIONAL RECORD-SENATE JUNE 19
by the commission or the bureau, as the case might be. In We will adjourn in a few weeks and go horne. We will be
more recent practice the experts come to the committees, in at home I hope the remainder of this year. We do not have
executive sessions of the committees, and the experts come our minds on legislation when we are at borne, we are not
upon the floor of the United states Senate in droves, writing bills. We are glad to get away from the humdrum
In the consideration of the particular bill now before us, and the burden of legislation.
when the bill was ftnally reported out of the Finance Corn- When we come back in January, what harm will come if
mittee I think it is no exaggeration to say that there were the President shall appoint some commission to look into a,
three times as many experts In attendance in that supposed situation which may require legislation when we reassemble,
executive session of the committee as there were Senators and if such commission shall have gathered a volume of in­
present to vote on the bill, a measure which puts a larger formation for our assistance and guidance in the matter of
charge upon the taxpayers of the United States than any legislation? What harm is there even if some gentlemen
bill ever heretofore introduced, have suggested a tentative draft of a bill, which we have the
During the consideration of the bill on the floor of the right to change, as in this case we have changed the bill
Senate the Senator from Mississippi [Mr. HARRISON] ha materially from what it was when it came to us?
from the beginning been flanked by two experts, the Senator Mr. CLARK. Evidently I have not been able to make
from Wisconsin [Mr. LA FOLLETTE] has had a private ex- myself clear to my distinguished friend from Kentucky.
pert of his own, and the seats in the back of the Chamber Mr. BARILEY. I am sure that is my fault.
have been occupied by experts of various kinds. So it is Mr. CLARK. No one complains about the furnishing of
with some trepidation that a mere Senator of the United information to any committee of the Senate or of the House
States rises to appeal to his colleagues in this body, and to of Representatives, or to either body itself. What I am corn­
differ from the opinions of this galaxy of experts. plaining about Is the assumption of infallibility by this body
Mr. BARKIEY. Mr. President, will the Senator yield? of experts.
Mr.
yeld.Mark
LARK I now, how a plain tale shall put my friend down.
Mr. LARK I
yeld.The first draft of the bill before us was produced after 6
Mr. BARKLEY. I do not recall when a single general months of work under direction of a stellar array of techni­
tariff bill has been enacted during my membership In the cal, medical, public-health, hospital, dental, and child-wel­
two Houses of Congress when there were not clerks andfaeoicl.
various experts sitting by the chairmen of the committees Thf ilwspeared, ndsoefioc3wekslaerth
Inaboth Hoss ito furnishlinfomtogwt.epetth experts of the Treasury Department advised a multitude of
measre
alne.very
s i wen radical changes in the bill, which were accepted almost
Mr. CLARK. I will state to the Senator from Kentucky without exception.
that of course the rule of the Senate provides for clerks of Since then experts advisory to the committees In the
committees being admitted to the floor, but I have searched House and in the Senate have brought about many further
in vain-although I am not complaining about this matter- modifications. and it is only now, at the last minute, after
for any authorization for representatives of various COMnIlS- all this multitude of changes, that the opinion of these ex­
sions and various bureaus to be on the floor of the Senate. perts suddenly becomes infallible, and in the face of this
I am making no point of that, however, they now maintain that the Federal plan as now contained
Mr. BARKLEY. I thought the Senator was, in the bill has suddenly achieved such perfection as to jus­
Mr. CLARK. I am simply laying the foundation for tify the wiping out of benefits of all private plans in favor
some remarks which I now desire to make. of a Government compulsory plan, which will probably
I do not desire to criticize these experts; they are honest again be changed by the experts.
men, for the most part, wedded to their own ideas, but it Mr. President, I have only a few minutes remaining, but
seems to me that when the time has come that the Senate I desire as briefly as possible to state why I think my amend­
of the United States cannot consider measures on its own ment should be agreed to.
responsibility without any more effective argument being Mr. LONG. Mr. President, before the Senator leaves the
made against a measure than that this corps of experts subject he has been discussing. I wish he would not overlook
does not approve it, this country has come to a pretty pass, what the Senator from Kentucky has pointed out, that as
Mr. BARKLE. Mr. President, will the Senator yield these experts continue to compile our laws the Government
further? becomes more complex and complicated, and needs more
AV. CLARK. I will in Just a moment. In other words, exPerts.
it seems to me that there may be very grave suspicion that Mr. CLARK. That is unquestionably true.
the real objection of these experts to this amendment and Mr. BARKLEY. If the Senator will yield, of course, that
to other suggestions for changes in the proposed act which is not what I said at all, and the Senator from Louisiana
have been advanced may bear a very close analogy to Presi- knows it is not what I said. He got the cart before the
dent Grant's remark about Senator Charles Sumner. It is horse, as he always does.
related that on one occasion someone told President Grant Mr. CLARK. I do not desire to have the Senator from
that Sumner did not believe in the Bible, and Grant replied, Kentucky and the Senator from Louisiana engage in a con­
"Yes, damn him; that is because he didn't write it." That troversy in my time, because I have only 13 minutes left.
Is the attitude of many of these experts regarding many of Mr. LONG. Mr. President, I beg the Senator's per-
the measures brought on the floor of the Senate. don-
I now yield to the Senator from Kentucky. Mr. CLARK. I must decline to yield, because I have
Mr. BARKCLEY. I wish to ask the Senator a question, some serious thoughts I desire to present to the Senate.
We are dealing always with a very practical situation. Back The statement was made by the Senator from Mississippi
In the days when legislation was simple it was easy, of coui-se, in the course of the debate--end I know In good faith.
for the Senators and the Members of the House of Represen- because it was based on the testimony of one of the ex-
tatives to deal more at large with the details of legislation. penis, to which I myself listened--that there is no private
I recall the act creating the Federal Trade Commission which pension plan more generous and more beneficial to the
I helped to write as a member of the Committee on Inter-, employee than the Government plan.
state and Floreign Commerce of the House of Representa- Mr. President, the expert who made that statement before
tives. and that was a very short act. But as the problems of the Finance Committee, the principal opponent before the
the Government have multiplied and our society has become committee of the amendment which Is soon to be voted on.
more complex, members of both branches of the National was M. W. Murray Latimer. He is the inventor, or the
Legislature and of branches of all legislatures everywhere chief proponent, at least, of the contention which has been
have found It more necessary to acquire accurate Information advanced here on the floor that the adoption of the pending
In order to guide them In the matter of legislatiol, amendment would lead to discrimination against the older
 1935 CONGRESSIONAL RECORD--SENATE 9629
type of employees and the laying off of employees at a fixed It was stated that thejadoption of this amendment Would
or earlier age. Yet the same Dr. Latimer, before he be- ruin the structure of the bill. That certainly has not al­
came an expert testifying in the executive sessions of the ways been the opinion of these experts, because In the
Finance Committee, when he was speaking in public on the March-April 1935 number of the Manager's Magazine, Dr.
stage at Cleveland in January, 1930 to the American Man- E. E. Witte, who sits upon the floor of the Benate as the
agement Association, used this language: adviser of the Senator from Wisconsin [Mr. La Foxuazrrl,
Talk Of general retiring age limit In any industry is sheer myth, used this language:
There has been quite a change in Dr. Latimer's position At the present time, there is no exemption offered to the em­
betwen
e he
apeaed
ime idepndetly n hs ~ ployer who has already embarked on a plan of private annuities
betwen he
ppered
imehe ndeendntl onhisowneither with a life-insurance company or by some other means
respoinibulity in public and when he appeared in a secret 11 those Insuranch companies underwriting such cases were to
session of the Finance Committee as one of the experts of offer a reasonable amendment to the pending bill Urging an el-
two Of these committees. emption for such employers. It might be accepted. There would
probably be two points Insisted upon, however. by our committee
Mr. President, It is said that there are no private plans or by the Social Insurance Board set up under the bill, namely.
which are more beneficial than the plans set up by the (1) the ability of the Insurer to guarantee security of the fund.
Government under this bill. I read to the Senate yester- and (2) the transferability of the amount vested In the employee
day a brief description of the plan of one company which In case he leaves his present employer.
now contributes 41/2 percent to a benefit fund as against MW.President, both of those features are completely cov­
3 Percent contributed by the employees, and which, in addi- ered in the amendment which I have proposed, and I read
tion to certain other benefits, provides in the plan an in-~ that statement simply for the purpose of showing that the
surance policy of the face value of 1 year's salary, for each statement which has been repeated here on the floor by vari­
employee. ous Senators that the adoption of this amendment would
I now desire to place in the RECORD, Wr. President, some ruin the whole structure of the bill is apparently entirely
other advantages in other private plans. What I shall state without foundation; at least It was not recognized by one of
is by no means comprehensive, but it is merely, Illustrative. the chief experts of the committee, Dr. Witte.
Many companies under private plans provide that earlier In closing, I simply desire to emphasize the fact that
retirement Ifor women may be had, or that there may be Senator after Senator In opposition to this amendment has
specal
retremnt.made
isablit the statement that the adoption of this amendment,
specialniesab hiit
retrement. reiewmna g 0 sProviding for the retention of private pension plans, would
Compnie
nrmalywhch etir woen t ag 60 asredound to the disadvantage of the older employees, and
against the Government plan of retirement at age 65, are, eatog h eao rmNwYr M.WGEI
among others, the American Insurance Co., the American the Senator from Mississippi [Mr. EHAuuuso~l], the Senator
Telephone & Telegraph Co., the Clark Thread Co., the East- from Wisconsin [Mr. LA FoLIz~mzl, and others have been
Rohete Goas Co.Eletric l Corporation,
FodadteSadr Oil requested to point out wherein that was possible, not one
Rocestr Gs
Coportio,
&Eletri ad te Sandrd ilof them has been able to lay his finger on the manner in
CO. of Ohio. which that would be possible and to Justify the statement.
Plans which retire disabled men before age 65, which is a The fact Is that this amendment, in its present form.
feature strictly forbidden under this Government plan, containing the provision that the contribution to the fund
among others, are the Boston Consolidated Gas Co., which by any employer shall not be less than the amount of the
permits retirement at any age after 15 years' service; the tax, makes it absolutely impossible for any employer to
Electric Storage Battery Co., which permits retirement at profit to the extent of one penny by having younger em-
any age after 15 years' service; the International Harvester PloYees. The only effect of cheaper insurance by reason
Co.; the Standard Oil Co. of New Jersey; and the United Of Younger employees would be to enable the employer to
States Steel Corporation, Purchase larger annuities, which would redound to tLe
Plans which retire men, not disabled, before age 65 after benefit of the employee and not of the employer.
a specified length of service, among others, are Armour & The provisions of this amendment make it absolutely cer­
Co., Commonwe~alth Edison Co., Spool Cotton Co., and the tain that the employee can leave the private pension system
Standard Oil Co. of California. at any time at his option and go into the Government
Mr. President, the trouble with these experts is that they system, taking with him not less than the amount which
take their model from the ancient highwayman of old Attica, would have been to his credit in the. Government fund
Procrustes. whose custom it was, so we are told in fable, if he had been under the Government fund from the very
to overpower wayfarers passing along a certain route and beginning.
compel them to lie upon a bed which he had specially con- Therefore I submit It is not to the Interest either of thle
structed. Those wayfarers who happened to be too short public or of the employers to penalize employees who now
to fill up the bed had their legs stretched out to the length are under the more liberal pension systems than that pro-
of the bed, and those unfortunates whose legs happened to Posed to be set up by the Government plan. it is not to
be longer than the bed had their legs hacked off. That is the interest of the public to prohibit forward-looking em­
the principle of the experts with reference to this bill in ploYers who are anxious to be more generous to their em­
opposing such an amendment as that which I have proposed. ployees than would be the system provided in this bill. I
Where the legs of any private plan are too short to' fit the point out further that under the provision of the amend­
model which the Government has made, no one has any ment the conditions of the private plan must be such as to
objection to having those legs stretched out; but it seems meet the approval of the board to be set up tunder this
more than passing hard and passing unfair to require the bill for the administration of the whole bill, and that under
legs of those companies which happen to have more gener- this amendment the duty is imposed on thatfboard In the
ous plans, which happen to be too long for the bed, to be future to follow up the operations of the various private
hacked off, more particularly when the length of leg hacked pension plans, and to Insure their conformance to the condi..
off would be for the benefit of the employees concerned. tions set forth In the amendment.
Mr. President, it was stated by the Senator from missis-, I now suggest the absence of a quoruna.
sippi [Mr. HaARMON] yesterday and by the Senator from Mr. LA FOLLETME Mr. President, will not the SenatOr
Kentucky [Mr. BARxLEYI a while ago that no employers or be generous enough to withhold his suggestion af the ab­
employees were concerned about the passage of this amend- sence of a quorum in order that I may utilize the remaining
ment. I know that they both made that statement in good time before 1 o'clock In order to read a letter Into the
faith, but, for their information, I should like to say to them RzcoRD?
that I have on my desk here letters from more than 715 em- Wr. CLARK. Mr. President. I shall be gla to yield tb&
ployers now having plans more beneficial to the employees remainder of my time to the Senator from Wisc0onsin.
than the Government plan, who protest against having their Mr. LA FOILETE. Mr. President, yesterday I made the
plans wiped out. statement that I was authorized to declare that the Amer..
9630 CONGRESSIONAL RECORD-SENATE JUNE 19
loan Federation of Labor was opposed to this amendment. On page 43. line II. after "See. 702.". insert '(a)."
I shall take the opportunity of using the remaining minutes On Page 43. lines 17 and 18. add the following new paragraphs:
towhch
eada lttereeied romMr.WiliamGren, (b) Th boar s1hall recive applications from employers who
to rad leterwhic
I ecevedfro Mr.Wiliar Grendesire to operate private annuity plans with a view to providing
president of the American Federation of Labor, addressed benefits In lieu of the benefits otherwise provided for In title U1 of
tmyefdaeJue19, 1935, as follows: thi act, and the board shaUl approve any such plan and issue a cer­
to mself ~tificate
datd of such approval if it finds that such plan meets the follow-
Am= xcAN FIEnEATXONoworLasoa. Ing requirements:
Washington, D. C., June .19. 1935. '(1) The plan shall be available, without limitation an to age.
Hon. RoaaRT 71,1 La FOuzrrs. Jr.. to any employee who elects to come under such plan: Provide4.
United States Seiuite, Wahntn .C. That no employer shall make election to come or remain under the
DEsn SENAroa: The American Federation of Labor Is unalterably plan a condition precedent to the securing or retention of employ­
opposed to the Clark amendment to H. R. 7280. the social-security ment.
bill. The amendment proposes to continue in operation private ".(2) The benefits payable at retirement and the conditions as to
insurance schemes In effect In various industries. This would retirement shall not be less favorable, based upon accepted acta­
exempt these industries that have old-age-pension plans from pay- arnal principles, than those provided for under section 202.
Ing the tax provided In the bill. '(3) The contributions of the employee and the employer Shall
it is well known that the management of many Industries dis-. be deposited with a life-insurance company, an annuity organizs­
charge employees when they approach the retirement age. Iii. tion.. or a trustee approved by the board.
formation was given the Senate that In the packing industry, '(4) Termination of employment shall constitute withdrawal
for instance, the private Insurance plan has been a success. Itfo the plan.
must not be forgotten that a few years ago when the packing "(5) Upon the death of an employee, his estate shall receive an
-plants of Nelson Morris & Son were sold to Armour & Co. the amount not less than the amount It would have received If the
insurance plan In effect in the former's plants was canceled, employee had been entitled to receive benefits under title U1 of
Although many employees had contributed for many years to the this act.
insurance plan, they never received a penny In return alter the '(c) The board shall have the right to call for such reports,
sale of the company to Armour & Co from the employer and to make such Inspections of his records
Another great objection to private pension plans Is tha I teds as will satisfy It that the requirements of subsection (b) are being
dscorag th f odermen.Menmor thn ~ met, and to make such regulations as will facilitate the operation
toempoymnt
yeariscofrage arereud employment. Thol
ermen iseno hope frthem f such private annuity plans in conformity with such require­
except through the enactment of the national-security bill. ments. d)TebadsllwtrwIsapovlfan uhln
Thttre are many reasons why the Clark amendment should be (d)nthe bordqeto thal withdyrawo Itsaproa ofnd tanythe plano
defeated. It would prevent many thousands of persons over 65 upny athonraequst theremploerfl -or meiefns the ht ot
plaiemnt
years of age ever receiving old-age pensions. On the other hand, anysaction tae heenebfist me herqiemnso
If the security bill Is passed as written, those entitled to old-age ubetOn pabe 52.fe" ie7 d h floignwprgah
pensons
thm.'(7) ill eceie Service performed by an employee before he attains the
Private Insurance plans were originated In Indulstries which age of 65 In the employ of an employer who has In operation
objected to the employees Jo-inin trade unions. It was an incen- a plan providing annuities to employees which Is certified by the
tive to the organization of company unions which gave the Induls- board as having been approved by It under section 702. If the
tries complete control over their employees, employee has elected to come under such plan, and If the Coin-
Therefore the American Federation of Labor can see nothing to missioner of Internal Revenue determines that the aggregate an­
the advantage of the workers In exempting private Insurance nual contributions of the employee and the employer under such
plans In the proposed law, plan as approved are not less than .the taxes which would other­
Yours very tumly, wise be payable under sections 801 and 804. and that the em­
Wm. GZEV ployer pays an amount at least equal to 50 percent of such taxe:
President Antertcan Federation of Labor. Provided, That If any such employee withdraws from the plan
The PRESIDENT pro tempore. The hour of 1 o'clock before he attains the age of 65. or If the board withdraws its
nde arivd,
havig th unnimos-cnset areeenten-approval of the plan, there shall be paid by the employer to the
havig
nde arivd,unnimos-cnset
th areeenten-Treasurer of the United States, In such manner as the Secretary
tered into yesterday, the Senate will now vote on the amend- of the Treasury shall prescribe, an amount equal to the taxes
ment offered by the Senator from Missouri [Mr. CLR] which would otherwise have been payable by the employer and
the employee on account of such service, together with interest
Mr. LA FOLLETTE. I1 suggest the absence of a, quorum. on such amount at 3 percent per annum compounded annually."
The PRESIDENT pro tempore. The clerk will call, the
ronl. Mr. CLARK. I ask for the yeas and nays.
The Chief Clerk called the roll, and the following Senators The yeas and nays were ordered, and the Chief Clerk pro­
answered to their names: ceeded to call the roELl
Adams Connally King Radcliffe Mr. BULKLEY (when his name was called). I have a
Ashurst Coolidge La Foliette Reyniolda general pair with the senior Senator from Wyoming [Mr.
Austin Copeland Lewis Robinson CARRY], who is necessarily absent from the city. I under­
Bachman Coetigan Logan Russell stand that a special pair has been arranged for him on this
Bailey Dickinson Lonergan Schall
Bankhead Dieterich Long Schwellenbach vote, which leaves me free to vote. I vote " yea."
Barbour Donahey McOlll SheppardMrLOA (wehinaeascld)Ihveag ­
Barkley Duffy Mcellar ShIpsteadMrLOA (wehinae ascld)Ihveae­
Bilbo Fletcher McNary Smith eral pair with the senior Senator from Pennsylvania [Mr.
Black Frazler Maloney Steiwer DAvis], who is absent. I am advised that If he were present
Bone George Metcalf Thomas. Okla. he would vote " yea ", and, as!I intend to vote the same way.
Borah Gerry Winton Townsend
Brown Gibson Iloore Traimeu I feel at liberty to vote. I vote " yes."
Bulkley Glore Murphy Trurnan The roll call was concluded.
Bulow CGuffey Murray TydinpgrsY atrhaigvtdI h ngtv) nti
Burke Hale Neely VandenbergM.NY (atrhvnvoeInheegie) Onhi
Byrd Harrison Norris van Nuys question I have a pair with the senior Senator from Vlr-
Byrnes HaTiRng Nye Wagner ginia [Mr. GLAss]. If he were present, he would vote " yes."
Capper Hatch O0Mahoney Walsh
Caraway Hayden Overton Wheeer Under the circumstances I withdraw my vote.
Chaves Johnson Pittinan White Mr. AUSTIN. The Senator from Wyoming [Mr. CARrt]
Clark Keyes Pp Is necessarily absent. He Is paired on this question with
The PRESIDENT Pro teinpore. Eighty-seven Senl torg the Senator from Utah [Mr. Tuooasi. If present, the Sen­
having answered to their names, a quorum Is present. ator from Wyoming would vote" yea ",. and the Senator from
The question is on agreeing to the amendments offered by Utah Would Vote "DAY.*
the Senator from Missouri [Mr. CLR] Mr. LEWIS. I announce that the Senator from Virginia
The amendments tfered by Mr. CLRKeu are as follows: [Mr. GLAss]. the Senator from California [Mr. MOADOOI,
On Page 15. after line 25. to Insert then following: and the Senator from Nevada [Mr. McCARREAN are unavoid­
"(7) Service performed in the employ of an employer who has in al bet n htteSntrfo thIr ~xa
operation a plan providing annuities to employees which le certifiedabybsn.ndttthSetofrmUh rTixs]
by the board as having berm approved by it under section 702. If th Is detained on important public business.
employee performing such service has elected to come under such I desire to announce the following pair on this question:
plan; except that If any such employee withdraws from the plan The Senator from California [Mr. MCAD0oo1 with the
before he attains the age of 65. or if the board withdraws its ap- Sntrfo eaa[r OanN.Ia o die
proval of the plan, the service performed while the employee was ~ izSenator woulNev
da vote
MIf pRAsnLIa o die
under such plan as approved shall be construed to be employment howenays Seatorwas footlIfows:t
as denined In thIs subsection."0 7be re.l, was announced.Aw 51.mw3 afo w:
1935 CONGRESSIONAL RECORD-SENATE 9631
YEAB-541 Mr. STEIWER. Mr. President--­
Adalns Clark Keyes Pittman The PRESIDENIT pro temipore. Does, the Senator from
Austin Coolidge KigPope Idaho yield to the Senator from Oregon?
Bachman Copeland Lewis Ru-sef
Bailey Dickinson Logan Sbf Mr. BORAH. I yield.
Barbour Dieterich Lonergan mt Mr. STEIWER. May I ask the Senator what determines
Borah Duffy L~ong Steiwer
Bulkley George McGill Townsend the relative contributions of the several States and the United
Bulow Gerry McKellar Truman States under the proposal of the Senator, whether It shall be
Burke Gibson Meliary Tyig $10 or $15 or $20?
Byrd Gore Maloney Vandenberg
Capper Hole Metcalf Van Nuys Mr. BORAH. The State determines how much it will Put
Caraway Hastings Moore White up. My amendment provides that whatever additional
Chaves ac OEMchoney amount is necessary to make It $30. the National Government
VAY&-4%5 shall contribute that much.
Ashurst Costigan Minton Schwellenbach Mr. STEIWER. In other words, the State would deter­
Lankhead Donahey Murphy Sheppard
Barkley Pletcher Murray Shipstead mine the amount of its contribution In each case and the
Bilbo Frazier Neely Thomas. Okla. Federal Government would merely supplement it with the
Black Guffey Norris Trammell ie fmkn h oa otiuin$0
Bone Harrison Overton Wagner ie fmkn h oa otiuin$0
Brown Hayden Radcliffe Walsh Mr. BORAH. Exactly.
Byrnes Johnson Reynolds Wheeler Mr. HARRISON. Mr. President, the amendment is not
Connally La Follette Robinson in agreement with what the Senator said he intended to
NOT VOTfING-4 offer, as I read the amendment. It reads:
Carey Glass McCarran Nyenaonwihsal eue xlsvl a l-g sitne
Couzens McAdoo Norbeck Thomas. Utah Anaonwihsalbusdecsilysol-gasstc.
Davis sufficient to make the Federal contribution with respect to each
So Mr. CLARx's amendment was areed to such individual for each month In the quarter *50.
Mr. BORAH. Mr. President, I offer an amendment, which Mr. BORAH. That Is correct.
I send to the desk and ask to have stated. Mr. HARRISON. It would seem from the printed amend­
The PRESIDENT pro tempore. The amendment of the ment which I have read that what the Senator Is attempting
Senator from Idaho will be stated. to do is to exact from the Federal Government $30 a month.
The CHIEF CLERK. It is proposed, on page 4, line 21, alter Aft. BORAH. Not at all. The wording of the bill re­
the comnma, to insert " and (2) an amount, which shall be mains as It is. In other words, a State plan for old-age
used exclusively as old-age assistance, sufficient to make the assistance must provide that it shall be -in effect In all
Federal contribution with respect to each such individual for political subdivisions of the State, and, if administered by
each month in the quarter $30." them, be mandatory upon them. Second, it provides for
On page 4, line 21. strike out "1(2)" and insert "(3)." finsu cial participation by the State. Third, such a State-
On page 4, line 22, strike out "amount" and insert nation plan must "1either provide for the establishment or desig­
of a single State agency to administer the plan ", and
Onpae5,lne1 ad6,srie1u1"lust1) n. nsr so forth. All that language remains as it Is,theand I simply
On e , lnetrke ut11 lase 1)11 ndInsrtadd that the State must put up something,
5 nd6, State must
"clauses (1) and (2) ." make its contribution, otherwise there is no provision wnat­
On page 5, line 10, after " clause"s insert "(1)." ever for payment to its old7-age people. If the State puts
on page 5, line 24, strike out "clause (1) " and insert up $15, then the National Government contributes $15.
",clauses (1) and (2)." Aft HARRISON. Does the Senator have any doubt, If
Mr. BORAH. Mr. President, the principle of the amend- his amendment should be adopted, that the States would
ment was discussed somewhat at length some days ago. Ahe contribute the very minimum and the whole burden would
amendment would make it certain that all persons 65 Years then be upon the Federal Government?
of age and over shall receive $30 per month. The amend- Mr. BORAH. The State would have to contribute some­
ment is, on page 4, line 21, alter the comma, to insert the thng before it could get anything.
following: Mr. ROBINSON. Mr. President, may I ask the Senator
And (2) an amount, which shall be used exclusively as old-age from Idaho how much the Sftte would hiave to contribute?
assistance, sufficient to make the Federal contribution with respect Mr. BORAX. The State must determine ftrst what It
to each such Indhil ual for each month In the quarter $30. sa contribute. If the State should contribute $1, the
in other words, if the State shall Prrvide $15, the National Federal Government would contribute $29. I do not recog-_
Government shall provide $15. If the State shall provide $10, nize the principle that the State would seek to get much from
the National Government shall provide $20. The object and under its burden or its obligation. There Iswill just as
purpose of the amendment are to assure that not less tha reason to assume that the people in a State be anxious
$30 shall be provided for those 65 Years of age or Over, to take care of their people as that the National Govern­
Mr. WAGNER. Mr. President, will the Senator Yield? ment will desire to do so.
The PRESIDENT Pro temPore. Does the Senator from Mr. ROBINSON. But the difficulty about the Senator's
Idaho yield to the Senaor from New York? aendment is that it provides that in case the States do
Mr. BORAX. I yield. not contribute substantially the Federal Government shall
Mr. WAGNER. U the State should appropriate nothing, make contribution to the amount of $30. The Senator need
would the Federal Government then contribute $30 to the not be misled about the matter. The amendment invites
individual? Is that the Senator's idea? the States to make a minimum contribution. in my judg­
Mr. BORAH. No. If the contribution of the State should ment, if the amendment should be adopted It would ma
be absolutely nothing, then the Federal Government would that the Federal Government would bear practically the
contribute absolutely nothing; but if the State should provide entire burden of this title.
$5 or $10, the National Government would contribute an Mr. BORAX. That Is on the assumption that the States
amount which would make the total $30. have no sense of responsibility and no idea of discharging
Mr. WAGNER. If the state should contribute only $1, their responsibility in regard to this matter. it proceeds
then the Federal Government would contribute $29? upon the theory that the Congress has the power-
1Mr. BORAH. That is quite correct. But I do not acep Mr. ROBINSON. Mr. President. will the Senator pardon
the theory that the States will not do all they are able to do. me?
The people of the States are Just as huamae and Just as M1r. BORAH. I pardon the Senator.
willing to take care of their aged as is the Congress. It is Mr, ROBINSON. I do not think that conclusion is Jus­
unjust to argue this matter upon the theory that the people tinled.
of the states are slackers; It is a question of ability. M1r. BO0RAX. And I think it is justinted.
9632 CONGRESSIONAL RECORD-SENATE JUNE 19
Mr. ROBINSON. I think the lanuage of the amend- Mr. BORAE. My desire In this matter is to make certain
ment provides that the States must contribute something. that the old people shall receive at least $30 a month. I
but no matter how little they contribute the Federal 0ov- believe that each sovereign State will discharge its duty and
ermient will contribute the rematinder up to the amount of responsibility in accordance with its financia' ability to do so.
$30 per month. In the case of a State which is In straitened There is not any more reason to suppose that a State will
circumstances financially, under the amendment the natural refuse to discharge its obligation than there is to suppose
result would be for the State to contribute Just as little as that Congress will do so. The authorities of the State feel
is possible in order to secure for its citizens the beneflts of a deep Interest in their people, the same as we do. They
the bill, have a humanitarian feeling the same as we have. They
Mr. BORAHI. I assume that the State will contribute will take care of the condition if they can, but If they cannot,
whatever It can contribute. I assume that the State will shall we leave the old people uncaced for?
be perfectly willing to discharge its responsibilities toward Mr. HARRISON. Aft. President. I do not desire to delay
Its old people. The States are just as likely to do It as Is action on this amendment. All Senators wish to do what
the Congress of the United States. If they cannot do so, they can for the needy aged; but if this amendment should
If a State is unable to make Its appropriation, then I say be adopted it would change the whole structure of this
the old people should not be left without help; that they measure. It would properly raise the question of which
should not be left without sufficient means to take care of should have jurisdiction as between the State authorities
themselves; and $30 a month is a very small amount, in my and the Federal Government in determining who should be
Judgment, to take care of these people. To proceed upon eligible for benefits if the Federal Government were to make
the theory that a State will do nothing if it is able to do It twenty-nine thirtieths of the appropriations for these people,
is, in my Judgment, a wrong theory, which could be done under the Senator's amendment. Cer­
Mr. ROBINSON. But the Senator's amendment does not tainly. if his amendment should be adopted the States could
require the States to do all they are able to do. It leaves all Point to financial burdens as a justification and apPropri­
it absolutely optional with the State to determine the amount ate $1 each for their needy individuals leaving the Federal
which it shall contribute, and therein lies the vice of the Government burdened with $29. that it would have t%)carry
amendment. 1, no more than the Senator from Idaho, wish under the amendment. If some States were to give more
to cast any reflection upon a State, but I know there than $1, a hue and cry would go up as to Inequality among
are some States whose financial condition Is such that they the States with reference to that matter.
would naturally resort to the policy of contributing just as We have exercised our Judgment as best we could in try­
little as would be necessary In order to obtain the Federal ing to inaugurate a policy I the Federal Government Co­
contribution, operating with the States, each giving one-helf. Is not
Mr. BORAH. I have no doubt there are States which ar every State in the Union in a better position under such a
financially in such condition that they would not be able to plan thian it has been heretofore? The Federal Govern­
meet the full $15 contribution. It Is for that reason that I ment heretofore has appropriated nothing for this Purpose,
do not want the old people in those States to suffer simply and the States have had to take entire care of their needy-
because the State is unable to take care of the situation.agdpolectfcurunrthrlefmsre
I d no reognzethepricipe
hattheStae illnotdo llWe are now proposing to give them $15 per month out of the.
It can do. The very fact that the Ndtional Government is Federal Meeasury. Of course It might be appealing to go
willing to assist in the matter In case the State undertakes back to our respective constituents and say, " I voted to give
to do something will encourage the people of the State to you gentlemen $30 of Federal funds Instead of $15 "; but
undertake to do what they can do we must look after, some other things than merely winning
I have no doubt that they would do all they can do; and votes from our constituents on this question.
If they do all they can do, but are unable to put up the WeaedigmrthnnyoerCgeshsatmpd
necessary amount, sheall we leave the old people without Weaedigmrthnn oerCgeshsatmpd
any means whatever of being taken care of In this situation? todo In providing $15 out of the Federal Treasury if the
Mr. President, I ask for the yeas and nays upon this ques- States put up $15. If the State puts up $10. the Federal
tion. Treasury will put up $10-an equal amount with the State.'
Mr. LONG. Mr. President, will the senator yield? So let us not get into a controversy here and delay the pas­
Mrt. BORAH. I Yield, sage of the bill over the question as to whether the Federal
Mr. LONG. There are some of us who would like to vote Government ought to put up four-fifths and the States one-
for this amendment, particularly the Senator from Georgia fifth, or the Federal Government two-thirds and the States
and myself, who represent States which are affected by a one-third, or the States $1 and the Federal Government $29.
constitutional inhibition. I wonder if the Senator would not If we adopt this amendment, we shall have to. undo the
permit us to add just a couple of words at the end of the whole policy we have already adopted in providing for State
amendment to provide that this requirement shall apply determined and administered plans. If the funds are practi­
for the year 1937. In other words, some States cannot sub- cally all Federal funds, we should naturally, provide admin­
mit constitutional amendments until the fall of 1936, close istration from Washington. The authorities h'ere would di­
to 1937. and this amendment, as I understand, requires the rect the administration of this measure, and say who, among
btate to make some contribution. That will give these the people over 65 years of age, are needy and should receive
States a chance to be prepared, Mlany State~s, even though these payments. In other words, the amendment would
they should adopt a constitutional amendment, would not necessitate a change so that decisions would be made by a
be able to raise the necessary revenue within this length Of bureau here In Washington and not by the authorities In
time, the local communities of the country. I prefer to leave the
Mr. BORAR. Mr. President. I should like to tak car jurisdiction in the States and to let the State legislatures
of those States which are not In a Position to do an~ythng and the State authorities determine who Ir the needy Indi­
whatever, but I felt that If I undertook to do that it would vidual who deserves and is entitled to this Particular Pen­
undoubtedly result In the defeat of the amendment. what is sionl. Then If the state puts up $15 or $10, the Federal Gov­
It that the Senator wishes to insertt errnment will mateh the $15 or $10.
Mr. LONG. I do not wish to have the Senator endanger so r hope the amendment will be voted down. because It
his amendment at all. I desire to Insert a provision that would jeopardjze the whole structure of the bill
the requirement as to contribution from any State shall not Mfr. pF.E'ICBEg Mr. President, I should like to ask the
be effective before the first, say, of 1937. This is the middle Senator a question. Is It necessarily required that the State
of 1935. The Senator Is calling on a State to raise a great as a State shall make the contribution, or maY the State,
deal of revenue, through Its county commissioners mak it?
Mr. EORAH. The -Senator would be no better off If that under the laws of Florida, the State as a State would not
were done. He could not come in under the present bll, -be permitted to make the contribution, but the county comn-
Mr. LONG. We could perhaws, but Georgia could not. missioners could arrange to raise the money.
 1935 CONGRESSIONAL RECORD-SENATE 9633
Mr. HA4RRISON. I may say to the Senator that It Is the Mr. BORAH. What Is the proposal which the -senator
aggregate of what the counties put up and what the State makes?
Puts UP that the Federal Government will match. It is not Mr. STEIWER. I have not attempted to phrase It. I
confined to the State itself, but Is broadened so as to take merely asserted that I am sympathetic toward the Idea
in communities also, of a minimum guaranty of $30 a month. It would seem
Mr. STEIWER. Mr. President, will the Senator yield? the way to secure such guaranty Is to add to the present
Mr. HARRISON. I yield. subdivision no. 1 merely a provisoa that the Federal con­
Mr. STEIWER. Does the Senator from Mississippi accept tribution shall' In any case be In such amount that tbb
the construction which the Senator from Idaho places upon total paid shall be $30 per month.
the amendment? Mr. BORAH. T1hat is precisely what I thought I was
Mr. HIARRISON. No; I do not accept that construction doing, and what I believe I am doing.
of 'It. I know what the Senator intended; but, although I Mr. FIETCHER. I suggest that the Senatorchange the
have not had time to read the amendment carefully In word " Federal ", in line 3, so as to make the " total contribu­
connection with this provision, Mr. Beaman and others of tion instead of " Federal contribution ", $30 a month.
"1,

the experts tell me they construe it differently; that under Mr. BORAH. I am willing to consider that.
the amendment the Federal Government must put up $30; Mr. WALSH. Will the Senator from Idaho explain
and that Is the way I read it. But, be that as It may. the whether or not that change will require the same amount,
Senator can change the provision if there is any doubt to be contributed by the Federal Government as Is contrib­
about it. ulted by the State government?
Mr. BORAH. There is not any doubt about it. There Is Mr. BORAH. As I understand, as the amendment would
not any, occasion for changing the language. No man with read with the change, if a State government should put up
a sane mind would contend that for a moment. Nothing $5 or $10 or $15. the Federal Government would match the
goes to the State unless the State puts up something, amount the State contributed, and then art additional amount
Mr. STEIWER. Mr. President. will the Senator Yield so as to make the total contribution $30. If the State gov­
further? I desire to make an observation about that matter. ermient should put up $30. the Federal Government would
Mr. HARRISON. I yield to the Senator. not put up anything.
Mr. STEIWER. It occurs to me that the pending pro- Mr. WALSH. By changing the word " Federal"'to total
posal made by the Senator from Idaho leaves the subdi- it would mean that it would be possible for 'the Federal
vision, numbered 1, on page 4. Just exactly as it Is; and that Government to have to contribute as much as $29.
the result of the amendment would be, if enacted in the way Mr. BORAHI. If the State put up only $1, that would be
now proposed, that the Federal Government, under subdi- true. .I am not so deeply Interested in the division of sover­
vision numbered 1, would match the money put up by the eignty, as to who puts up the money, but I want the money
State to the extent of the aggregate amount of $30 per contributed. If the State cannot do it--and I take It that,
month. That is tosay,if theState put up$15, theGovern- the Statewill doItitfit can-if the StateIs unable todolt,,
ment of the United States would put up $15. If the State then I want the National Government to contribute, to have
put up $10, the United States would put up $10. The Pend- the old folk taken care of.
tog amendment contains added language which provides that Mr. FRAZIER. Mr. President, I am very strongly in sym­
the United States shall provide an additional amount. I now pathy with the amendment of the Senator from Idaho.
read the amendment- There are many States which, because of conditions due to
And (2) an amount, which shall be used exclusively as old-age drought and other circumstances, are not able to collect
assistance, sufficient to make the Federal contribution with re- taxes from the taxpayers. I am satisfied that there are quite
spect to each such IndlIvculus for each month In the quarter $3o. a number of States which could not meet the $15 contribu­
Mr. President, what is It that amounts to $30? Is it the tion. Provided for to the original bill That would ma
total? Of course not. I agree with the Senator from Idaho that the old people in those States above 65 years of age
that this language is perfectly clear. I think there is no would have no pensions.
ground for misunderstanding or misconstruction. The lan- It seems to me the amendment would provide a means of
guage provides that the contribution of the Federal Gov- giving Practically all the States a chance to make a small
ermient for each such month shall be $30. appropriation so that the old people would get $30. I have
Mr. HARRISON. How does the Senator get away from great confidence in the States putting up as much as they
the plain language of the amendment, which says- can, and when conditions improve, if they can put up con­
Sufficient to make the Federal contribution with respect to each tributions equal to those of the Federal Government, they
*30.
such indlviduai for each month in the quarter will do so.
Mr. STEIWER. There is no way to get away from it. Furthermore, during the last few years there have been
Mr. HARRISON. That is the Federal contribution. old-age pension organizations formed all over the Nation.
Mr. STEIWER. That is right. If the State put up $15 which, as we know, have advocated much larger pensions
under subdivision no. 1, the United States would put up than are suggested. True, the money is to be raised to a
$15; and then, under the pending amendment, which is different way from that provided here, but that does not,
marked "Subdivision No. 2"1 the United States would put up alter the fact that those organizations are out for larger
another $15 in order to make the. Federal contribution $30; Pensions, and are advocating larger pensions. and I know
and in that case the net result would be a payment to each they will not be satisfied with the provisions of this measure.
person of $45 Per month, two-thirds of which Payment It seems to me that the amendment of the Senator from
would be provided by the United States. Idaho would help greatly in assuring at least $30 for old
,I do not wish to vote for that proposition. I am sym- people to States where the States can put up some money,
pathetically disposed toward the Proposal made by the and even if it is limited to only a few years, it would help
Senator from Idaho as he explained his proposal. It is very materially, to my opinion. I hope the amendment will
easy for me to approve a guaranty of a minimuim payment be agreed to.
of $30 per month. If we are to enact a law on this sub- Mr. BORAH. Mr. President, to order to make the.matter
ject the payment ought to be suffilent in amount to mean beyond question, I desire to limit the contribution to $30.
something to the recipient of the payment. An aggregate I do not want any loophole left. I therefore ask leave to
payment substantially less In amount than $30 per month insert, after the word "contribution " In line 3. the words
is inadequate. It will not accomplish the purposes of the " plus the State's contribution with respect to each such
bill. I am wondering If, to order to have that proposition Individual for each month, not less than $30." That would
presented, some Senator would not care to revise the pend- not create any obligation on the part of the National cloy­
tog amendment to order that It may accomplish the pur- ermient to put up more than. the diference between what
pose sought by the Senator from Idaho. the State would contribute and $30.
9634 CONGRESSIONAL RECORD-SENATE juymq 19
Mr. HARRISON. If the State contributed a dollar the Mr. LONERGAN. Mr. President~, title xi relates to an.
Federal Government would contribute $29, but the whole nuity bonds.
contribution could not be more than $30. The Proposal was submitted before the House Ways and
Mr. BORAH. That is quite correct. means Committee, and was rejected. it was not inoor­
Mr. WALSH. It simply makes more definite the Point porated in the bill which came to the Finance Committee of
the Senator has raised. the Senate. At a meeting of our committee, when this
Mr. BORAH. That is right. There need be no mistake Proposal was consIdered. 12 memubers out of 21 were present.
about it, Eo far as I1am concerned; that is what I desire. Seven voted in favor of the Proposal and five voted against
The PRESIDING OFFICER (Mr. mlNroN in the chair). it. Three of the four Senators who voted for the proposal,
The question is on agreeing to the amendment offered by according to their statements in the committee, were under
the Senator from Idaho, as modified. the belief that insurance companies do not sell annuity
Mr. BORAH. I ask for the yea-s and nays, bonds, especially for small sims. I read from the recordr of
The yeas and nays were ordered, and the legislative clerk our proceedings:
proceeded to call the roll. Senator BARxEY. Let me ask you this: I have -a number of life-
Mr. LOGAN (when his name was called). I have a pair Insurance policies, not very large, but I have severs! policies, and
with the senior Senator from Pennsylvania [Mr. DAvis]. In these Insurance companies with which I have policies write me
his absence, not knowing how he would vote, I withhold my letters every few months suggesting an annuity policy that taey
,, ,,ould like for me to take. They are all above my ability to reach
vote. If pernritted to vote, I should vote na. them. I cannot comply with their terms and take one unless it
The roll call was concluded- be an Insignificant amount, because the amount involved in -an
Mr. LEWIS. I wish to announce that the Senator from initial payment and then the annual payment thereafter is so
etaied n iporantpublic business.
Utah[MrT~zmlis large that the ordinary fellow who has not a considerable income
isdetanedon
Utah[Mr Tnoias Iporantcannot get It at all. what is going to happen about that? This
I also wish to announce that the Senator from Oregon Is Just an inquiry for information. These companies, it seems to
[Mr. McNARiv] has a pair on this question with the Senatoir me. do not get out In that little field where many people who
from Georgia [Mr. RussELL]. The Senator from Oregon might have a desire for an annuity can obtain it. what are we to
would vote "1yea"1 and the Senator from Georgia would do about that?
vote "1nay"1 if present. Then comes my' answer:
I desire also to announce that the Senator from Arizona Senator LoNzAoNr. All of the insurance eompaniee with which
[Mr. ASEuRSTi, the Senator from North Carolina [Mr. I am familiar Will Write any kind of an annuity policy.
BAIyLE, the senior Senator from Georgia [Mr. GEORGE], Senator B~Axcxz. I do not know any of that sort.
Senator LoimosrN. I do not think there is any doubt about IL
the Senator from Virginia [Mr. GLAWs] the Senator from Senator BAR~xxr. I have the New York Life, the Union central,
California [Mr. McADool, the Senator from Nevada [Mr. the Penn Mutual, the Equitable, and none of them do.
Pmr~x&l, the Junior Senator from Georgia [Mr. RussELL3, Senator LoNEROAN. We have some of the outstanding insurance
that
and the Senator from South Carolina [Mr. SxrTHl are neces- they do It. In Hartford, Conn., where I reside, and I know
companies
sarily detained from the Senate. Senator Ozoacz. They write small annuities?
Mr. NYE. Announcing my pair with the senior Senator Senator LONEzour. YeS.
from Virginia [Mr. GLAss] as previously, I beg to announce Following the action of the Finance Committee, I con­
that were he present he would vote "1nay"1; and It I were tacted officials of life Insurance companies to ascertain
permitted to vote I should vote "1yea" whether or not the life insurance companies of my city issue
Mr. BUILKLEY. I repeat the announcement of my general aniisi ml us o ut rmalte ae
Pair with the senior Senator from Wyoming [Mr. CAREY]. Mayniisi ml teCnciutM
21,s 1935,uot from ua lefeIsrdanced
Not knowing how he would vote on this amendment, I trans- Cay., 1HartfordCom h onntcu.uul:ieInuac
fer my pair to the junior Senator from Utah [Mr. THoMAs] Co.,Hrfo94hadifreonn.:igl
and vote "1nay." As ofDecember 31. 1934, this companyhaInfre,85sgl
The esut ws
anouned-eas18,nays60,as ollws'premium life annuities, representing a total annual Income to the
The esut ws
anouned-eas18,nays60,as ollws:annuitants of $1,652.902.52. The average annual income to each
YEAS-18 annuitant was $428.77, which would give an average monthly in­
Bilb Prais, opeThoms. Oia. come of $35.73.
Boneo Frazier PopeErme OUThiss average monthly Income of *35.73 Indicates the fact that
Borah Lewis Bchwellenbach Wheeler the bulk of our annuity business consists of annuities of moderate
Capper Long ShIpstead size. As our annuity contracts are about the aame as those of
Copeland Mccarrsn Steiwer other companies, we believe these figures are fairly typical.
NAYS-GO0 I now quote from a letter received from the Phoenix
Adama Clark Hatch Norris Mutual Life Insurance Co., of Hartford, Conn., dated May
Austin Connally Hayden 0OMahoney
Bachman Coolidge Keyes Overton 29, 1935:
Bankhead Costigan Kinig RdlfeUnder another group of contracts on the annuity plan we pro­
Barbour Dickinson La Flollette Reynolds vide that at a definite time In the future there will be paid an
Barkle Duffyic Rcoblinhppar average of *455.93 in annuity Income per annum, which Is the
Brownk Deufhe MCGIIla Shwnsend equivalent of $37.99 per month. These contracts are available in
Brownk le therr Mcaeller Towmnsn units of *10 per month of annuity Income, and the premium,
Bulow Gibson Met~calf Tyig depending upon the duration of the contract, may be as low as
Burke Gore Minton Vandenberg *20 per annum.
Byrd Guffey Moore Vait Nuys Iqoefo eotsbitdt eb h onciu
Byrnes Hale Murphy Wagner Iqoefo eotsbitdt eb h onciu
Caraway Harrison Murray Walsh General Life Insurance .Co., of Hartford, Conn.:
haeHstNOT olNGe 17 ht.Title Xi, United States annuity bonds, which was eliminated by
NOT OTIN-Ithe House, has been reintroduced by the Senate. In the Senate
Ashiurst Donalhe? Mcwary Smith Finance Committee report, one of the reasons given for this por­
Bailey George Norbeck Thofl255 Utah. tion of the bill is that "Insurance companies do not now sell any
Carey elasn NF. considerable number of commercial annuitier to Individuals In­
0ouzefls Togs, Pittman stallmenti. People of small means are practically outside of the
Davis Mckdoo Rummuf commercial-annuity field." This hardly Justifies the lssuancei at
So Mr. BoR~A~s amendment was rejected. annuity bonds to provide as high as $100 per month old-age In­
Mr. LONERGAN. Mr. President, I send to the de* an come. Many Insurance companies will Issue policies providing old-
Iask
amenmen o hve
whih rau.age income as low as *10 per month, and some even lower. it
Iaskto
amenmen hve eamseems
whih to me that this portion of the bill should be eliminated,
The PRESIDING OFFICER. The amendment will be because the few who will purchase the annim"ty bonds will most
statedL likely be individuals who can be taken care of by the Insurance
The CHnw CL~mx. On page 72, after lDne 6, It Is proposed =-~
to strike out all of title XI. including all sections and para- Mr. President, not only have the life-Insurance comPanies
graphs thereof on pages 72, 73. 74, 75. 76. 77, 78, 79. and to already written thousands of atnnulty policies, but they are
the end of the first paragraph on pag 80, preparing to take care of an immense Potential market for
 1935 CONGRESSIONAL RECORD-SENATE: 9635
annuities in a much more comprehensive way than the plani insurance business along a much broader front than the
provided by title XI of this bill. Government could Possibly, undertake? Is the United States
Dr. S. S. Huebner, dean of the American College of i~fe Senate going to reinsert in this measure a section which was
Underwriters, in an article in the Liffe Insurance Courant, stricken out by the House, and which never should have been
pointed out, as long ago as September 1932, that America Is there in the first place?
rapidly becoming annuity-minded. He said: I ask the Senate these questions and believe that Senators
During the past decade premiums paid for annmuities have In- will vote for my amendment, which will do no injury to this
creased relatively more than six times as last as premiums paid measure, and which will not harm In any way the theory or,
for life Insurance. Annuities are about the only important branch the practice of old-age pensions or unemployment insurance,
of the Insurance business which has gained during the hecticfowhcIhaeordfragetmnyers
Years Of 1930 and 1931. Ret~irement pensions are also being con-fowhcIhaeordfragetmnyem
sidered everywhere In industry, by educational institutions. gov- Mr. HARRISON. Mr. President, I merely desire to make
ernkientai bodies, and the like. Moreover, insurance companice a brief statement. The provision giving an opportunity to
are more and more emphasizing " old-age income Insuranc people to buy annuity bonds, with the limitation which Is
and
so sine
isel te pln ephaszesthe utilization of life­
insraceprcedsforanuiy ncmepurposes during old age, in the bill, that in no instance may they receive an an­
Inted
fpracin eah nlas formerly, emphasis Is now nuity of more than $100 a month. it was placed thiere to
plaedupnmtiv t bneitthe policyholder while living, take care of a. group that did not come within the other
The ielnnutywi son b raged adequately aiong the in­
surance field. I believe the growth of the annuity concept among provisions of the measure. I think it is one of the minor
the American people will be the greatest single development in features of the bill; in other words, I think the annuities
the life-insurance business during the next quarter of a century. provided in title 3II of the bill, and the old-age pensions
Mr. President, I think these reports point out conclusively and the unemployment features under other titles are much
that Private insurance companies have developed and ar more Important than Is this; but, for the reasons I have
developing a much more stable field of annuities than the just stated, we placed this provision In the binl on the
Senate has perhaps heretofore realized. Here we have a bill recommerdation of the President's committee which Inves­
including a section which would put the Government into tigated the matter.
that business in such a way that it would intrude upon Mr. LOICERGAN. Mr. President, may I ask the Senator
Private business enterprise, and no doubt discourage the from Mississippi a question?
widespread development of annuities which is being under- Mr. HARRISON. I yield.
taken. As has been pointed out, the companies are taking Mr. LON~ERGAN. At the time this proposal was before
Policies with returns as low as $10 per month to the holder, our committee there were 12 Senators present, were there
Title XI of this bill would provide for annuities of not less not?
than $60 nor more than $1,200 per annum, which Is clearly Mr. HARRISON. The Senator states the fact correctly
an intrusion on the private insurance business, with reference to that.
Besides demoralizing the wonderful progress of annuity Mr. LONERGAN. 'There are 21 members of the ecom­
Insurance in private companies, this section would place mittee, and the vote -was 7 to 5.
an unfair burden upon the taxpayers. The Government Mr. COSTIGAN. Mr. President, may I ask the Chairman
would pay the overhead, such as rents, lights, and so forth. of the Finance Committee a question?
which private companies must figure into their costs. The Mr. HARRISON. Certainly.
taxpayers who would not be interested in the annuities would Mr. COSTIGAN. It is my understanding that the an­
be required to carry the burdens of those who received nuitY bond feature of the binl is designed to offer many
the annuities. The benefits would go to a particular few million people an opportunity to purchase cheap annuity
at the expense of the many, insurance, free from premiums to agents, and that the
The Government already offers, through the Treasury and Persons who, under the Committee amendment, are offered
the Post Office Departments, numerous opportunities for this security are employers or employees who do not come
Investments of small savings In the tax-exempt field. An~ under other provisions of the bill.
extension of this program to include annuity insurance Mr. HARRISON. The Senator has stated the facts cor­
bonds would definitely compete with an important business, rectly.
and, moreover, would tend to invite individuals to lean Mr. COSTIGAN. The aggregate number of those who
upon the Government instead of private business and the would be enabled, under these*provisions, to purchase rea­
various State and municipal governments which are ex- sonlable annuity insurance would apparently be something
pected to participate In this social security program, like 22,000,000 people. Does the Senator know whethe.r
The PRESIWING OFFCER. The time of the Seao that is a correct estimate?
from Connecticut on the amendment has expired. He has Mr. HJARRISON. That statement was made by Repre..
15 minutes on the bill. sentative lxwzs, I think, in a very able presentation of this
Mr. LONERGAN. I wil use my time on the bin,. matter before the Finance Committee.
Above all other considerations, I think we should remember, Mr. COSTIGAN. Mr. President, may I say that it was
Mr. President, that the insurance companies of this Nation on my motion that these provisions were included in the
have been our last wall of defense in our depressing times, bill in the Finance Committee? The motion was made
When our banks crumbled and finance was chaotic our insur- following what was, as the Chairman of the Finance coin­
aince companies stood like the rock of Gibraltar. E-t 'uyone mittee has just stated, a very able presentation of the rea­
knows that had they crashed this Nation would have been sons for the amendment by Representative D,&vin j. LzwWs,
placed in a desperate condition. Property values would have of Maryland, who has been a lifelong student of this and
vanished and millions more of our people would have been on allied questions. Representative Lawxs Pointed out, as just
the charity and relief lists at the expense of the Government. indicated, that there are about 22,000,000 persons in the
The insurance companies were the last to ask for any gov- United States at this time who do DAt come under the
ernmental assistance. Because of their good management protective clauses of the pending bill. Among those are
and sound policies, they did not need it so much as did other the self-employed a~nd the members of professions, who
business enterprises. Their position during the depression, are estimated at this time to be about 11,125.000, and ap­
in my opinion. was the strongest single contributing factor to proximately 10,000,000 workers. The purpose of the Pro..
maintenance of financial stability and public confidence, visions, of course, is to permit the purchase from the Goyv.
Had they crashed. all confidence would have crashed with ermient, on reasonable terms, of aninuity bonds which Wil
them.guarantee the purchasers incomes running from a olnUW.
Now, Mr.President,is the Senate of theUnited States going mum of $60 a year to $1,200 a year per person.
to enact Into law a provision in this binl which will injure When Representative Liwzs presented this matter to tine
these companies? Is the Senate going to place the Govern- Senate Finance Committee he permsusively enumerated rem-
ment into a definitely private business? Is the United States sons Which make tbese amendments particularly appealing
Senate going to discourage sound development of the annuity to Members of the Senate, to professional men of .ll aorta,
 9636 CONGRESSIONAL RECORD-SENATE JUNE 19
and to employers who are unable, for one reason or another, principal eah year to provide them annuity for which they
to guard against the likelihood that old age will find them fully Pay.
Take again, a case of a husband who has a, $15,000 estate. He,
reduced to need. He made a statement which, with the wishes to provide for his wife in the event of his death. In his
permission of the Senate, I should like to have read at the will he can have the estate converted into a life annuity for bet
desk, because it presents the reasons, as conisey as pogsi benefit Instead of having the estate eaten up by the court costa,
trustee's fee. and commissions. If he has children be can secure
ble, for the adoption of these amendments. their futures In the s'lme way Instead of willing them lump sums
Mr. L4ONERGAN. Mr. President. will the Senator from to be wasted by Inexperieniced 1hainds.
Colorado yield? Let us see about the great human interest involved. in this
Mr.COSIGA. Iyiedwith pleasure. bill we undertake to realize certain social security objectives.
Mr.I CSTIGA.
yeldW~th regard to wageworkers and employees up to *2J5OO a year.
Mr. LONERGAN. Does the Senator know whether or we have covered the field approximately. But how about the Im­
not the United States Government can issue insurance at mense number of people who are not employees? Take the phya­
a cheaper rate than can insurance companies of long clans, the lawyers, the clergy; take the small business man. atM
experience? may be his situation when he readhes 65 or 66? There are more
than 20.000.000 involved In that situation who may be reason­
Mr. COSTIGAN. It is my understanding that under these ably included In the social security principle of this bill.
amendments the Government of the United States would Apparently, there Is no objection to the annu~ity provision ct
sell annuit3 Jonds to investors-- this bill as far as the public is concerned or any part of the pub-
Mr. ONEGAN.Tha
Is orrct.lic. In fact, the insurance companies have spoken through one
Mr. Tha
ONEGANiscorectof their principal leaders, Mr. Thomas I. Parkinson, of the Equl­
Mr. COSTIGAN. And that there would be an absence of table Life Assurance Society of the United States. He said that
the premiums which ordinarily go to insurance representa- the social insurance provisions of the bill would, like the *10.000­
tives, Insurance provision
Increase greatly and of the wartheactthought
for theof soldiers, operate to
Mr. LONERGAN. If these bonds were authorized and subject of Individual Intensify the public
protectlon through inwsuaice.
on the
issued they would be exempt from taxation, would they not? I quote, In part, from a letter on the subject v..ltten by Mr.
Mr. COSTIGAN. There is a provision exempting th Parkinson:
bonds from taxation, but if the Senator from Connecticut Impetus .Just as the business of life Insurance received tremendous
from the sucoc-ssful efforts of the Government to provide
will consult the amendment he will find a provision which a sizable amouznt of insurance on the lives of all called to the
does not exempt the income of these bonds from taxation. Arm~es in the creation and the development of the War Risk
Mr. LONERGAN. The Senator from Colorado and the Bureau, so do I believe that social insurance agitation will result
Senator from Connecticut have been working for some time In renewed appreciation and great stimulating of life-insurance
activities, both individual and group.
to secure the adoption of a constitutional provision so that " Insurance men are ready to lend their experience In the serv-
in the future such exemption will not be possible. Ice of this social insurance class by assisting In the formation of
The next question I should like to ask the Senator from social insurance measures along lines of sanity and workability.
Colorao
Coloado
u.-As
s--efforts
an Insurance man, I would say without hesitation that the
to provide through social Insurance measures a more self-
Mr. COSITGAiN. Before the Senator from Connecticut respecting. form of relief, a better budgeted charity program, will
proceeds, may I call his attention to the provision With do much to arouse public interest in the whole subject of security.
respct o tx exmptonIn doing this, that overwhelming number of upstanuding men and
respct o tx exmptonwomen who represent the Insurance field will be Inspired to look
Mr. LONERCGAN. The Senator has stated that the pro- more deeply into their Insurance needs and to more completely
posed law provides that the income from the bonds shl provide security for themselves. Thus, It Is likrely, In my judg­
be taxed. ment, that history will repeat Itself and the Impetus given to the
Mr. COSTGAN. I understand the Senator from Con- oaf cueof life insurance by the War Risk
*1e0.000 on the life of every enlisted Bureau In putting a value
man will be accentuated
necticut does not dispute the accuracy of the statement with the result that the present agitation for social-insurance
Made? The part to which I refer Is section 1105 of the measures will swell the volume of Individual and group life insur­
amenmen,
ead
amenmen,
eadsas aswhch
ollws:ance
whchollos- and annuities.
In doing this, the insurance companies and their agents will
SEc. 1105. The provisions of section 7 of the Second Liberty not only be benefited by an enhanced business, but the bust.'
Bond Act, as amended (relating to the exemptions from taxation ness Itself will the better be able to muster to its support publie
both aSOto principal and Interest of bonds issued under authority appreciation of the tremendous national and community service
of section 1 of that act, as amended), shall apply as weU to rendered by life Insurance supplied through -premium-paying
Muatedi States annuity bonds, except that annuity and redemp- Americans. who, wanting no charity, take care of themselves and
tton payments upon United States annuity bonds shall be sub- those dependent on them."
ject to taxation by the United States, any State. and any posses- There Is a field of potential traffic In the small annuity, as
Sion of the United States, and by any local taxing authority, but there was in the small parcel, which requires special inducement
to no greater extent than such payments upon other annuity and conditions in order to develop It.
bonds or agreements are taxed. When we took up the parcel post 24 years ago we found that
Mr. LONERGAN. Is It the purpose of the Senator from the express companies were moving three parcels per capita
in the United States. In Switzerland they were moving nine per
Colorado to have Incorporated in the RxcoRD the entire capita. They had a completely developed parcel-post system,
statement made by Representative LzWIs? with rates and conditions of service adapted to the needs of this
Mr. OSTGAN.It
s myundrstndin tht
Mer. madetotheIFinance Commsanitte by R a th stte-small parcel. It could not pay the 24-cent minimum which the
heprsetatve- express company found It necessary to charge the parcel here.
mentmad
he inane to Cmmitee y RpresntaiveIt could pay 7 or S or 10 cents.
Lzwis was confidential, because made in executive session. With our parcel-post system, the S parcels per capita have
Mr. LONERGAN. It is a matter of public record now. rehed about 9 In the United States, all of which shows that
Mr. Becuseof
OSTGAN hatfact I ske Retwo-thirds of that traffic, potential for generations, had been de-.
Mr.COSIGA.
Bcaue f tat act I ske RPresent- feated by the
ative LEWis to prepare for use of the Senate a statement permitting It toabsence Move.
of rate systems and conditions of service
summarizing his arguments in support of the amendment In this small annuity field you are finding analogous phenomn.
now being considered. That is the statement before me at enon. For the big lump-sum payment you would take In
this time 'Which I have requested to. have read by th1cer ,000 at one stroke. Aix agent assuredly would call for that.
deskrkTh company will get about 4y percent out of
at teds.the small installment monthly payments that may that. But for
begin as early
The PRESIDIG OFFCER~. Without objection, the clerk as SO or 55 to accumulate an annuity at 60 or 65. no agent can
will read, as requested. bother with that. The expenses of the work would utterly defeat
The
cerkrea
egilatveas ollws:the motive to do it, unless the great expense were addLd to the
The
cerkrea
egilatveas ollws:premiums, when the motive to buy the annuity would be
I know a married couple who are past 60. They have sarved defeated.
some *15.000 In their life's, efforts. It. they knew just how long And so we find here, as with the small parcel, a neglected
each of them would live they could provide their own annuity by field the insurance company cannot serve with sufficient economy.
investing the *16,000 In safe Government bonds. They ecould Then there Is the very vital element In this whole situation.
take enough out of the principal each year. in addition to the It Is the question of faith. It Is the controlling element In our
Interest, to provide themselves a hundred dollars per month. But conditions. Now, the Government supplies that element of faith
they do not know how long either Of them Will live, and so they The private company has to face a wall of distrust and break
are afraid to touch the principal, through It. In the course of generations-eand It has taken gen­
-Now, the Government, does know how long they are going to erations--It has succeeded with respect to the, familiar life poli­
live as members of a class, and paying them the Interest as it cies. But the annuity policy Is new, that Is. It is new to the
would on the bonds the Clovernment can take enough out Of the mQses& They need to be eduaated to its wisdom. -Me 40overn"
 1936 CONGRESSIONAL RECORD-SENATE 963
ment hasno wan ofdistus to meet. provisions in this bill may be expected to work instead at
tca educate the pub-
lic Th copaneswil Idiminishing Insurance sales by the standard companies Ot
coe I fo teir share in the resulting
confldence lin the annuity. and will have a monopoly of the busl­
ness in nanuities above $100 a month. Massachusetts. It spread the use and advertisemenit of instir­
Through the Initial faith that the Government supplies. we ance to such, ank extent that by common consent today ihD
can hope to provide a means which men and women who are standard companies are the substantial beneficiaries Of the
not covered by these pension and employment provisions may. Mas~ahietts eperiment.
through their own savings and efforts in life, provide for themn­
selves. Some, of course, will be satisfied with $30 A month; I1 suggest, therefore, that this amendment should be sert­
others May desire in proportion to their capacity to acquire such ously, considered by the Senate. It should at least go to
annuities for themselves. Why deny them the surest security in conference. In my judgment, there is no serious opposition
doing so to It on the part of the leading Insurance companies of the
Eatilsee ~divduus
o nuberof ,t cverd udertft rovi- country. The only objection comes from those who, like the
SiOnSg of title ZI and eligible for voluntary annuities under Sntrfo onciu M.LNRA] r eutn
title XiSntrfo onciu Mr oEG21 r eutn
(Based on 1930 census) to see any form of Government activity which may be r8"
Owners. Self-em"ployed and professionals------------11.8 25.000o garded. even theoretically, as competitive with Private bust-
Parm operators-------------------------- --- --- 5,882.000
ness.
X trust that the amendment of the Senator fro Can­
ReItail and wholesale dealers --------------------- 1,798.000
Self-employed trades ------------- --------------- 352,0o0o necticut will not prevall.
Prof essionals..----..-.----------------------- ---- -- 2.223.000 The PRESIDING OFFICER. The Chair 'will state the
Cther --- ------ -------- 1,572.000 parliamentary situation. The motion of the Senator fo
Workers excluded because of occupation ------------- 10,158.000 Connecticut [hrr. LoNEachx] seeks to strike out an aed
ment of the committee not as yet acted uponl.
Farm laborers.-------- - - - 4.378.000 Mr. ADAMS. Mr. President, I wish to ask the Senator
Domestics In prvt oe ........ 2.060.000 from Connecticut, in my time, to answer a few questions
Teachers -------------------------------------- 1,082. 000
Government, N. IL C.'-------------------------- 1,403,oco about this amendment.
Casuals ---------------------------- 490,000 One questioni is as to the accuracy of the terminology.
Institutional - --------- I----- 680. 000 it seems to me it is incorrect to describe that which la
Othera-------------------------- ------ --------- 65,000 really an insurance policy as a bond. I am wondering If I
Total- ---- ------------------------ 21.981.000 am correct in that feeling.
Source: Committee on economic security. An adjustment has Mr. LONERGAN. Of cours'e, It Is a Plan. to sell bonds;
been made for those lndlvlf~uals 65 years of age and over. but the bill provides for the sale of bonds. Bonds and
The per capita Income of employees in agriculture was $684 In policies in this sense are the Same thing.
1929 and $352 in 1932.'
The per capita Income of employees In domn tic service was W. ADAMS. A bond, as a matter of legal terminolog.
$961 in 1929 and $670 In 1932V is an instrument providing for the payment of a fixed sgm
The number of annuities In force under the Canadian voluntary of money at a fixed time.
an~nuity system was 14.400 on M~-ich 31, 1933. The maximum Mr. LONERGAN. That Is eorrect.
annuity Is $1,20. The contracts pay 4-percent interest com­
pounded annually, the interest and administrabive cost being paid Mr. ADAMS. Here is an Indefinite sumn Of -money. de­
by the Government. The average annuity contract for the Immne- pending upon the length of life of the annuitant.
diate annuity type was $418 on March 31, 1933. Nearly 84 percent Mr. LONERGAN. Yes, sir: and the amount Paid.:
of all annuity contracts written In 1930 were for less than $600. M DM.Wyddnttecmitedsrb hs
In addition to Canada, Ecuador. Prance, Japan. and the Nether- MrAD S.Wyddnthecmieeesibtee
aends have voluntary annuity systems. Instruments by a correct terrm, and call them annuity pol-
Mr. COSTIGAN. Mr. President, using the balance of myiesrtrthnbd?
time on the bill, I wish first to express regret that the Ini Mr. LONERGAN. The Senatur f.r-o Connecticut op-
portance of this question is not being given attention by a Posed this Proposal in the committee. He subsequently
larger present representation of the Senate. As disclosed asked that the proposal be submitted to the full member­
in the thoughtful statement of Representative LEwrs, [his ship. Therefore, he Is wlt In position to answer the Sen­
proposal represents a moderate plan for handling annuity ator's question.
prot~ection for the benefit of approximately 20.OCOO00 Amer- Mr. ADAMS. One other question, If I may submit ItL
Icans in a field in which the private Insurance companies The amendment provides that the Insta~llments which are
have shown little active concern, to be paid to the annuitant-
The subject was canvassed fairly and fully before the Shall be such as t, afford an Investment yield 0 *not In,
Flinance Committee. It developed, as Illustrated il). ihe eX-e& of 3 percent per anm
statement of Mr. Parkinson, read at the desk a moment ago, An Investment yield, If I understand the term, means the
the interesting conclusion that the standard Insurance corn- income upon a principal, without the consumption of 'the
panics of the country, are today not disposed to criticize this principal. The essence of an annuity contract Is the coni­
type of Government activity; more than that, their offi'elals sumption of both income and principal.
incline to believe that if the Government will deal with Mr. LONERGAN. That Is correct.
annuity. bonds as provided in this amendment, the ultimate Mr. ADAMS. So that under this bill the return to the
effect will be to popularize other forms of life insurance in annuitant is limited to not to exceed 3 percent. He may
this country and increase the business and net earnings of have a life prospect of 15 years, and yet be limited to &
life-insurance companies. 3-percent income upon the amount he pays for the bond.
We are not without a precedent In thus anticipating the Mr. COSTIGAN rose.
popularization of life insurance. In or about 1907, under the Mr. LONERGAN. Will the Senator from Colorado an-.
leadership of no less eminent a public official than Mr. swer the question of his colleague?
Justice Brandeis, the State of Massachusetts authorized its Mr. COSTIGAN. Mr. President,!Y congratulate the Juiokr
mutual-savings banks to receive payments in small amounts Senator from Colorado on the Ingenuity of his suggestion.
on moderate-priced insurance policies primarily for the Mr. ADAMS. It Is a question, not a suggestion.
benefit of working men and women, and from that day to this Mr. COSTIGAN. It has not been offered by Insuranon
the system inaugurated in Msachusetts has been a marked experts. In fact, it should be said to the Senate that thas
success. Indeed, It Is doubtful if there Is any single contri- entire amendment has met the approval of experts. it has
bution to public affairs by Mr. Justice Brandeis of which not encountered from any part of the Federal Govermient
he thins so highly as this. That law worked as the such objections as the Senator from Colorado*has made.
Mr. ADAMS. May I suggest that I can see why the
sNot elsewhere classified, insurance company would not object, because the annuitty
INationa Inoe 993 7dOf& dm 5lDS O 2.Polit~y Pays so much less than the policy which die in=u-
Ibi. ia14 ance company would offer. I1 should apprehend that thoe
9638 CONGRESSIONAL RECORD-SENATE Jum~19
Insurance company would object If the CGovernment weebusiness even In a limited way, and my purpose is to vote
issuing a better policy than the company. in favor of the amendment.
Mr. COSTIGAN. May I suggest to the able Senator from Mr. ADAMS. Mr. President, will the Senator yield to me?
Colorado that the field with which we are now dealing is Mr. McKELLAR. Certainly.
one in which the standard life-insurance companies have Mr. ADAMS. I wish to ask a question which Is very un­
rarely issued policies or given the sort of assurances the welcome these days. In what clause of the Federal Constl­
Senator from Colorado is now indicating? May I also say tutlon does the Senator find Justification for the Issuance of
that if there is merit in his argument, there is no reason a Federal insurance policy?
for apprehension about these provisions, beciuse the insur- Mr. McKEILAR. I know of no such clause in the Con­
ance companies can enter the field and provide those who stitution. I know there has been an opinion by Judge
desire old-age annuity security, under the theory of the Grubb, in Alabama, which is now on appeal, in which he
Senator from Colorado, on much more reasonable terms held that the Government could not go into business. I do
than are provided in the bill. I- think the Senator will find, not know whether the opinion is correct or not; I1have
on investigation, that what the Government would do under doubts about its correctness. However that may be, there Io
these provisions is to provide old-age annuity security in a no clause of the Constitution under which this title can be
field where today It cannot be purchased by citizens of this defended. It is true that under the express war power that
country with anything like the same assurances, is given us in the Constitution we had a right to Insure our
Mr. ADAMS. Mr. President, my distinguished colleague soldiers, but as I look at it we have not a scintilla of right
has misinterpreted my inquiry as an argument. I am try- to put the Government Into the insurance business as is
Ing to get some information about a provision of a bill which proposed, and I stop long enough to ask what clause of the
comes from the committee with very inadequate explanation, Constitution gives us the right?
which puts into a bill designed for certain purposes, insur- Mr. COSTIGAN. May I ask the able Senator from Ten­
ance features; and I am merely making inquiries. nessee on what clause of the Constitution he predicates the
I have asked why the terminology should be used to call ability of the Federal Government to create the Tennessee
a policy a bond, which tends to mislead those who invest. Valley Authority?
The title opens with the declaration that the Secretary of Mr. McKELLAR. It is upon that clause of the Constitu­
the Treasury is authorized to borrow on the credit of the tion which deals with interstate commerce. It Is that pro­
United States to meet public expenditures and to retire out- vision of the Constitution which gives the Government au­
standing obligations rather than an accurate statement of thority over navigable streams, an entirely different situa­
what is intended, if I read the section correctly; namely, to tion from the present one. Even supposing we had no right
Issue annuity policies to those who wish to buy them. That to create the T. V.A., that would be no reason why we should
Is, we start out In the bill with what seems to me to be really pass another unconstitutional measure, and I for one am
a misstatement or, rather, a failure accurately to state the not willing to vote for a bill which I feel is unconstitutional.
purpose of the title. Mr. COSTIGAN. The able Senator from Tennessee finds
Then I have inquired why, the payments are limited to no intrastate activities in the Tennessee Valley Authority?
investment yields rather than to properly annuity yields, Mr. McEMLAR. Of course there are Intrastate activities
which consume principal as well as interest, but there are Interstate activities also; and it Is oiperatlni
I am not arguing. I am merely inquiring in order that on a navigable stream which runs Into several States, a very
my own vote may be cast in accordance with the facts. different situation from the one we are now considering.
Mr. COSTIGAN. Mr. President, I have, of course, no de- Mr. COSTIGAN. It is gratifying to realize that the Sen­
sire to misinterpret any suggestion of the Senator from Colo- ator agrees with those of us who find no constitutional diffi­
rado. If I am in error in assuming that the Senator ha culty affecting the Tennessee Valley Autbority and other
made an argument, I of course withdraw that assumption large Issues which are to come before the Sapreme Court. I
or suggestion. I may say that it impresses me as of very wish only to say that what is attempted-­
slight consequence what the particular phraseology of these The PRESIDING OFFICER. The Senator's time has
amendments is so long as the essential end Is clear. The expired
purpose is to provide a Government promise In the form of Mr. BARKLEY. Mr. President, I desire recognition, and
an annuity bond, which may be described as an insurance I will yield to the Senator to ask me a question.
policy, if the Senator prefers, constituting a guaranty of Mr. COSTIGAN. I appreciate the courtesy of the able
security for the later years of those who desire safely to Senator from Kentucky. What I want to say further Is
Invest their earnings or savings for that result. this---and to state it as a question, I trust the able Senator
Mr. McKELLAR. Mr. President, may I ask the senior from Kentucky will agree with me--that the amendment pro­
Senator from Colorado a question? vides for the issuance of bonds in exchange for money. The
Mr.COSIGN.
erainy.Senator from Tennessee undoubtedly does not deny the au­
Mr. MCOSELAN. Doestanottl tteptyh.ovrmn thority of the United State:; to sell its bonds for money or to
Into theins ranc busiessnttitilputhGoemntissue agreements in writing.
Intr.hCnsTurance Itsdoessi? io ay navr Mr. McKELLAR. Of course not.
Mr.COSIGA.
I dos i a ino wa, i a erylimted Mr. COSTIGAN. There is sufficient authority for this
field, In which, according to the testimony we have had, proposal In that'~pwer,
insurance companies have not desired to go, It is a field Mr. McKE3M&AR. I do not think It has anything to do
which has not been cultivated by standard insurance com- with the beginning and operation of an insurance company
panies. It has been neglected, and indeed, according to our In ccmpettiton with private companies.
Information, many, insurance men would be glad to see the Mr. BARKLEY. Mr. President, the Senator from Ten­
Government undertake this responsibility because it would nessee a while ago referred to the provisions made by the
advertise the value of insurance as Protection against the Government for insuring tbhe soldiers. The Constitution
financial casualties of 1ife. gives the Congress the right to declare waas, and that Is afl
Mr. McK]LLAR. But it does put the Government Into it says about that subject. We have used the war power,
the Insurance business. Will the Senator from Colorado assuming it covered everything we wanted to do following a
permit me to make an observation? declaration of war; but I challenge the Senator from Ten­
Mr. ADAMS. I am very glad to yield the floor. nessee or any other Senator to find anything In the Constitu­
Mr. McKZ LL . During the war we went into the insuzr- tion which specifically authorizes the Issuance of a life-
ance business for our soldiers, but since the war we have insurance policy on a soldier. There Is no such authority In
found It to be very Impracticable for the Government to the Constitution.
continue that activity, and we are getting out of it as Mr. McKELLAR. I do not know whether or not the ques.
rapidly as Possible. With that experience in mind, it seems tion of the insurance policies issued on the lives of our
to me to be most unwise for us now to go into the Insurance soldiers has been before the Supreme Court; I do not belle"e
1935 CONGRESSIONAL RECORD-SENATE 963
It has; but unkler the broad power of self-defense, In what Is the Senator's colleague. Undoubtedly we have the power
generally spoken of by those who quote the Constitution as to Issue bonds, and we have the power to use the credit at
the "war power "1, there is some semblance of excuse for the United States. XifI have $2,000 to invest in such a 1id
the issuance of policies on the lives of soldiers when we are the terms of which are that I winl be paid back in monthly
exposin~g thein to the hazards of war. But there Is no or annuEa Installments the money I put in, there is certainly
Possible way in which the constitution could be construed nothing unconstitutional about that. It is merely a dif­
to cover Putt;Lg the United States Government Into the life- ferent way by which the United States would repay its debts
Insurance bua. or the money that it borrowed from the people, just as In
Mr. EARK1L iY. Of course. it is useless for any Senator to the case of Liberty bonds. The Government could pay
argue with an ither Senator upon the Constitution. because them back all at once, or, if It desired to do so. it could
each Senator I nows more about that than all the other 94 authorize repayment in installments. That Is all this pro­
Senators vision undertakes to do. When we come down to brass
Mr. McRKELE. AR. I have no doubt as to the unconstitu- tacks, that is all it amounts to. I place a certain amount,
tiOnalitY of t1be pending proposal. and I expect to vote of money in a Government bond, and we provide for paying
against It. it back in annual installments, which Is simply a method
Mr. BARKLEY. We talk about war powers which we by which the Government repays its debt.
assume exist, and no doubt they do. but they exist largely Mr. McKEXTAR. Mr. President, Wil the Senator yield?
because there is another provision in the Constitution giving Mr. BARKLEY. I yield.
Congress all power necessary to carry into effect the powers Mr. McKELLAR. In answer to the Senator's previous
specifically conferred upon it. so that we do act on things question, I read from the Constitution. as follows:
which are not mentioned in the Constitution, and we have Smc. B.The Congress shall bave power a * to 55
to do it. But in this particular situation we provide for the provide for the common defense and general welfare of the United
issue of a bond by the Secretary of the Treasury. If I have states.
$2,000 which I desire to invest I cannot go to an ordinary And again-.
life-insurance company and get an annuity; they are not To raise and support armites.
interested in small matters of that sort. They are not con- And again-
cerned about an annuity which involves so small an invest­
ment
s mre It tan t ~To,
beausroube make 91l laws Which shall] be necessary and propeg for carry-
Mr. McKELLAR. Wr. President, I think the Senator is And g fxtor the. o on oe.
wholly mistaken In making that observation, because on M.BRLY e;alItefrgigpwr.
hundreds of occasions I have been urged by representatives Mr. BARELLY. Yes;all isthpeforeoviinpowers.yJdg
of insurance companies to buy an annuity policy. ment. I now ask the Senator to put his.finger on any clause
Mr. BARKLEY. I have, too, but I never had any of them or phrase of the Constitution which allows the United States
ask me to buy any policy oi less than $10,000. Government to enter the Insurance business generally.'
Mr. ADAMS. That was a personal compliment. Mr. BARKLEY. I shall quote, not In exact language, but
Aft. LONERGAN. Mr. President, I read from a communi- the substance of the constitutional provision, that Congress
cation written by a standard life-insurance company which shall have the power to borrow money on the credit of the
issues a strictly annuity policy for as low as $10 a month. United States; and that is what this amounts to. It is bor­
I quoted from our proceedings in the Senate Committee on rowing from the people who des're to buy these bonds money
Pinance, and among other things I remember the query, of which is to be returned to them in annual payments in the
the Senator along the same line. I think the Senator fro form of an annuity. The Senator can call It an "insurance
Kentucky and a few other Senators joined the majority lin policy" if he wishes t6. If I have $10,000 which! IInvest in a
voting for this prop osal In the belief that the life-Insurance LUbefty bond, that is an insurance policy to some extent. If
companies do not issue smiall annuity policies. In that I invest $10,000 in a bond of the United States, that money
respect those who so voted were in error, will be paid back to me according to the terms of the bond,
Mrt. BARKLEY. It may be that!I was In error, but so and that Is an insurance that I will get my $10,000 whenever
far as the committee had any information on the subject, the Government pays It. The pending measure provides
we were not. However, I am not making any question that if I put in $10,000 or any other amount provided In the
about It. bill instead of paying it all back to me at once, the Govern­
Mr. ADAMS. Mir. President, will the Senator yield? ment shall pay it back in annual installments which we caln
Mr. BARKLEY. I yield. an annuity. I do not see any difference, so fax as the prin­
Mr. ADAMS. I have made Inquiry In reference to the ciple is concerned, between one and the other.
Constitution, and I wanted to suggest to the Senator from The PRESIDING OFFICER. The time of the Senator an
Connecticut as to the foundation upon which the inquiry the amendment has expired.
was made. I was relying upon a fair inference from the Mr. BARKLEY. Mr. President, a parliamentary inquIry,
action of my learned colleague, a good lawyer, who offered The PRESIDING OFFICER. The Senator will state ItL
an amendment to the Constitution, and I assume he would Mr. BARELEY. I understood the Chair to say that the
not have asked to have the Constitution amended if he had question is on the amendment offered by the Senator from
thought It was adequate to meet these conditions. That Connecticut. [Mr. LowimGAml to strike out the amendment
was the basis of my inquliry. of the Senate committee.
Mr. BARKLEY. I do not know what the suggestion of The PRESIDING OFFICER. The situation. as the Chair
the Seniator's colleague Is. understands it, is this: The amendment offered by the Sen­
Mr. ADAMS. A broad, sweeping amendment to the Con- ator from Connecticut [Mr. LomoRAN] would strike out an
stitution which would provide unquestionably the authority amendment of the committee not as yet acted upon. There.
for the Government to take the Proposed action, fore, when the Chair puts the question he will, put the ques­
Mr. BARKLEY. It did not have any reference to Insur- tion upon the committee amendment; and Lif a Senator
ance, did it? wishes to accomplish the purpose of the Senator from Con-.
Mr. ADAMS. I think It would include Insurance. necticut he will vote nay.' If he wishes to vote for the
Mr. BARKLEY. That would depend on how broad it Is. committee amendment, he will vote "yea.7
I do not know how broad It is. I do not think it was Mr. BARKLEY. That Is what I was coming to. I
specillcally Intended to refer to a situation such as this thought the Presiding Offcer was about to put the question
It may be that 14tIs a sort of an omnium gatherum, which on a motion to strike out a committee amendment which
contemplates an amendment to the Constitution giving us had been acted on. The vote is on the committee amend-
power to do everything we have not power to do now under merit. Those who favor the committee ame-ndment wil
the Constitution; but that would be a different thing; and vote "yea", and those who -ane opposed to the temmlttee
I do not understand that to be the amendment offered by amendment will vote -nay.'
9640 CONGRESSIONAL RECORD-SENATE JUNE 19
The PREsIDING OFFCER. Those who wish to acconi- Mr. RUSSELL.T For a period of only 2 years, until an
plish the purpose of the Senator from Connecticut will vote opportunity can be afforded all the States -to establish.
"nay.," State system.
Mr. LONERGAN. I suggest the absence of a quorumn. Mr. HARRISON. And pending such time some agency in
The PRESIDING OFFICER. The clerk will call the roll, to be appointed by the Social Security Board which may
The Chief Clerk called the roll, and the following Senators reach the needy individuals who would come under the
answered to their nae:provisions of the bill.
Adamsn Coolidge La Poilette Reynolds Mr. RUSSELL.. The Senator from Mississippi is correct.
Ashlrst Copeland Lewis 11obinson This problem in the States that have no old-age-pension
Austin Costigan syteohsbennretyRccntaedwihiehel o
Bachrnan Davis Lonergan Schall sse a engetyacnutdwti h at3o
Bailey Dickinson Long Schwellenbach weeks by the policy of the Relief Administration In Inaugu­
Bankhead Dieterich McCarran Sheppard rating the work-relief program in turning back to the
Barbour Donailey McGill Shipstead
Barkley Duffy McKeilar smith States and local communities that have no means whatever
Bilbo Pletcher McNary Steiwer of providing for them, old people who are not capable of
Black Frazier Maloney Thomas. Okla. being employed on the work-relief program.
Bone George Metcalf TownsendM.HARSN MrPridnImytaehtsfr
Borah Clerm Minton Trammeil M.HRIO.M.PeietImasaethtofr
Brown cmbson Moore Truman as one member of the committee Is concerned, I shall not
Bulkley Gore Murphy Tydings itroea beto oteaedetgigt ofr
Bulow Guiley Murray Vandenberg itroea beto oteaedetgigt ofr
Burke Hale Neely Van Nuys ence, because I believe that the States should have an
Byrd Hanilson Norris Wagner opportunity of providing pension systems for themselves.
Byrnes Hastings Nye Walsh
Capper Hatch 0 Mahoney Wheeler Mr. BORAH and Mr. EING addressed-the Chair.
Caraway Hayden. Overton White The PRESIDING OFFICER. Does the Senator from
Chavez Johnson Pttmanl Georgia yield; and If so, to whom?
Clark Keyes Pope
Conly Kbn Pdli Mr. RUSSELL. I yield first to the Senator from Idaho as
The RESDINGOFTCER(Air. Durry in the chair), he rose first. Then I will yield to the Senator from Utah.
Eighty-nine Senators have answered to their names. A MrBOA. ayIskhwmnySteaeInhei­
quorum is present. The question is on the adoption of the uation which the Senator describes?
committee amendment. Mr. RUSSELL. There are, as I understand, at the present
Mr. LONERGAN. The pending motion is to strike out time 15 States which have no old-age-pension systems and
title XI. 33 that have such systems, the systems varying, of course;
The PRESIDING OFFICER. The Chair will state that they are not uniform throughout the United States.
the question will be submitted as to the adoption of the coin- Mr. BORAH. Do I understand correctly that this amend­
mittee amendment, beginning on page 72. line '7,being title ment provides that for those 15 States the Flederal Govern­
XI. Those desiring to support the committee amendment ment will put up $15 for people who have reached the age
will vote "1yea." Those favoring the amendment of the of 65 and over until such States shall have adopted pension
Senator from Connecticut will vote "nay." systms?
Mr. HARRISON. Those in favor of the amendment of the Mr. RUSSELL. Not necessarily; only for a period of 2
Senator from Connecticut will vote " a. years; the provision suggested will expire by operation of
The PRESIDING OFFICER. The question Is on agreeing la tteedo .yearpeid
to the committee amendment, on page '72. beginning with I may say to the Senator from Idaho that the amendment
line 7, being title X. does not compel the Social Security Board to pay these in­
The ampndment of the committee was rejected. dividuals $15: it may pay them amounts not exceeding $15.
Mr. RUSSELL. Mr. President, I offer an amxendment, I assume that in some States the Social Security Board
which I send to the desk and ask to have red might not pay the entire amount of $15; but It Is limited to
The PRESIDING OFFICER. The amendment will be $15, that being the maximumn which will be paid from the
stated. Federal Treasury to individuals In States that today have
The CHIEF CLERK. On page 4, line 24, before the period, It no old-age-pension system.
IsIs popoed
aa olo
popoed oan
oiser
iser
th folowng:Mr.
olonandthefolowig: BORAH. It
entcorrectly. Then, I think
provides such Statesthe
that IInunderstand amend.
as have no
Provided, That In order to assist the aged of the several States provision for old-age pensions for the next 2 years the Fed-
who have no State system of old-age pensions until an opportunityer
Is afforded the several States to provide for a State plan, Including Government is to contribute $15?
1ra
financial participation by the States, and notwithstanding any Mr. RUSSELL. Or such amount, not exceeding $15, as
other provision of this title, the Secretary of the Treasury shall the Social Security Board may fix in such States.
pay to each State for each quarter until not later than July 1. 1937, M.BRR tI rtycranta twl e$5
to be used exclusively as old-age assistance, In lieu of the amount M.BRH ti rtycranta twl e$5
payable under the provisions of clause (1) of this subsection, an Mr. RUSSELL. I hope and trust It is. I certainly hope
amount sufficient to afford old-age assistance to each needy Indi- that it will not be any less than that amount.
vidual within the State who at the time of such expenditure to 65 Mr. President, in view of the statement of the Senator from.
years of age or older, and who Is declared by such agency as may
be designated by the Social Security Board, to be entitled to re- Missssippi [Mr. HARRisoN], I will not make any extended
ceive the same: Provided further, That no person who is an inmate remarks on this amendment. It occurs to me that the pro­
of a public Institution shall receive such old-age assistance, nor posal is not only just and fair but that It would be unfair to
shall any individual receive an amount in excess of $18 per month, aged and needy individuals In the States whljlh today have
Mr. HARRISON. Mr. President, will the Senator yield? no old-age-pension system to'say that the Federal Govern­
Mr. RUSSELL. I yield. ment will not extend its hand to assist them in the slightest
Mr. HARRISON. I have talked to the Senator from degree. Not only that, but they will not be permitted to share
Georgia about the subject matter of this amendment and in this fund which will be paid by the taxpayers of every'
have had numerous conferences in regard to it. What the State at a time when they are being taken off the relief rolls
Senator seeks to do by his amendment Is to enable States and being turned back to the counties and municipalities
which have no pension-system set-up, and which, there- which are already largely involved and are absolutely unable
fore, would be unable to take advantage the first Year, 1936, to assist such individuals.
of the appropriations by Federal Government for assist- We know the present desperate condition of many of these
ance to States or States such as the Senator's State. Georgia, old people, who have seen their savings swept away either by
where the State constitution prohibits pension plans being the depreciation in securities or in other investments. They,
created, making necessary an amendment to the State con- perhaps, had farms which were under lien and have seen the
stitution, to avail themselves of the Federal assistance until lien foreclosed on account of the low price of farm cormmodl­
such States may have t~ime to Dadopt a State plaza, ties and the depreciation In the value of farms. As I see It,
 1935 CONGRESSIONAL RECORD--SENATE 964
It would be nothing less than wanton cruelty to an old person Mr. HARRISON. Mr. President.
in a State that has no old-age-pension system to say. "Conm- The PRESIDING OFFICER. Does the Senator from Wy­
mencing with the passage of this bill, $15 a month for such oming yield to the Senator from Mississippi?
Persons will be sent to a State that has an old-age-pension Mr. 0MAHONEY. I yield.
system, but you shall not be permitted a dime, and in addi- Mr. HARRISON. This Is the amendment, is it not, which
tion,, You, without any resources whatever, will be taken off 'was suggested by the Post Offce Department with reference
the relief rolls" to bearing the expenses which may be Incurred by the De-'
I Would not favor as a permanent policy the Flederal Partment under the terms of the pending bill?
Government paying $15. whether the State matched it or Mr. O'MAHONEY. Mr. President, the -amendment covers
not, but States which now have no old-age-pension systems the suggestion made to the committee by the Post office
should at least be afforded an opportunity to adopt within Department. The bill makes it the duty of the Department
the 2 -Year period a system designed to take care of their to collect the taxes for which provision Is made, but does not
aged arid those in need. Efforts to establish such systems provide any method of meeting the additional expense to
are now being made all over the Union. In two or three which the Department will necessarily be put. In other
instances constitutional amendments will be submitted to words, It adds another nonpostal function to the Post Office
the people of the States within the next several months, Department. Last year such nonpostal functions cost the
or in the general election of 1936, which will enable the Department more than $66,000,000.
adoption of old-age-pension systems. Some States, such The amendment provides that the Post Offlce Department
as the one I have the honor in part to represent in this shall report to the Trearury what services are required to
body, have constitutional provisions which make it impos- Perform the duties imposed by the bill and directs the Tress-.
sible for them to contribute a single dime to an old-age ury to advance credit to the Department to meet the addi­
pension system, and under the peculiar provisions of our tional expenditures. Similar provisionIs are In the duck
constitution an amendment cannot be submitted to the stamp law and in the baby bond law.
people, until the next general election, which will be in Mr. HARRISON. I shall not object to the amendment
1936. So. regardiess of how strongly all the people of my going to conference.
State and of other States similarly situated might favor The PRESIDING OFFICER. The question is on agreeing
an old-age pension system, they would be powerless to do to the amendment proposed by the Senator from Wyontnlg.
anything on earth to match the Federal contribution until The amendment was agreed to.
after the general election in November 1936. I hope the Mr. BLACK. Mr. President, I desire to offer an amend­
amendments will be adopted. ment proposing an additional section to the bill. Ini my
Mr. KING. Mr. President, will the L .nator yield? Judgment, this amendment has been made necessary by the
Mr. RUSSELL. I yield to the Senator from Utah. adoption of the so-called "1Clark amendment." I shall send
Mr. KING. Is there no law In the State of Georgia which the amendment to the desk and request that It be read; and
permits the counties or other political subdivisions to make after it shall have been read, if there shall be any desire MOa
provision for the Indigent? It be explained or the necessity for the amendment made
Mr. RUSSELL. There Is; there is a law that permits coun- plain, I will be glad to explain It to the Senate.
ties to have poor farms, but if the Senator from Utah were Th2e PRESIDING OFFICER. The amendment proposed
familiar with the conditions obtaining on some of the poor by the Senator from Alabama will be stated.
farms or pauper farms of this Nation, he would never by The Cmxr Cx~nax On page 52, after line 'N,it is proposed
any act or word of his suggest for one moment that any to insert the following new section:
aged person over 65 years should be sent to such a farm. Sec. 812. (a) It shall be unlawful for any employer to make with
Mr. KINTG. I am not talking about that. What I am ntry -1ra Coffpany, annuity organizatIon, or trustee any eon­
am tr- trct wth respect to carrying out a private annuity Plaa approved
Ing to ascertain Is whether the Senator's State, Georgia,, Is by the Board under section 702 if any director, offce, employee, or
powerless to give to its indigent an amount which would shareholder of the employer is at the same time a director, officer,
be equivalent to that which under the bill Is to be provided employee, or shareholder of the Insurance company, annuity organi.
by the Flederal Government, zation, or trustee.
(b) It shall be unlawful for any person. whether employer or
Mr. RUSSELL. The State of Georgia is absolutely power- I srnecompany, annuity organization, or trustee, to knowingly
less. The purposes for which taxes may be levied In the offer, grant, or give, or solicit, accept, or receilve, any rebate against
State of Georgia are set forth in detail in the constitutiono the charges payable under any contract carrying out a privat6
nfannuity plan approved by the Soar4 under section 702.
that State. If the Senator from Utah desires, I will read (c) Every Insurance company, annuity organization. oar trustee
him that provision of our constitution. who makes any contract with any employer for carrying out a
Mr. KING. I do not ask the Senator to do that. private annluity plan of such employer which has been approved by
the Board under section 7C2 shall make, keep, and preserve for much
Mr. RUSSELL. It is Impossible for one cent in taxes to be periods such accounts, correspondence, memoranda, papers, book4..
levied and collected In the State of Georgia under our con- and other records with respect to such contract and the financial
stitution as it stands today for the purpose contemplated by transactions of such company. organization, or trustee as the Board
thisbil.
t o do
thisbil.
Inordr
hatan aendentto te Satemay deem necessary to Insure the Proper carrying out of such con-
d Ithtorer a amndmnt o te Satetrt ad to prevent fraud and collusion. All such accounts, cmr-,
constitution is absolutely necessary, respondence, memoranda, papers, books, and other records shall be
The PRESIDING OFFICER. The question is on the subject at any time, and from time to time, to such reasonable
rom ~Periodic,
amenmentproosedby
amenmen bythehe Snatr
Proose enaor frm eorimay special, and other examinations by the Board as the Board
prescribe.
The amendment was agreed to. (d) Any Person violating any provision of this aection shall _be
Mr. O'MAHEONEY. Mr. President, I offer the amendment deemed guilty of a misdemeanor and, upon conviction thereof, shall
whichI esk.be
sed tothe punished by a fine of
whic
te dsk.for
I endto not more than 1 year, not more than $10,00o or imprisonment
or both.
The RESDINGOFFCER.Theamenmen wil be Mr. BLACK. Mr. Presidcnt, I thinkr I can explain very
stated.briefly the object and purpose of this amendment and the
The Cmxr CLzmx On page 49, line 22, after the word necessity for its adoption.
"deposited", It is proposed to Insert the following: The amendment which was offered by the senator from
Together with a statement of the additional expenditures In the Missouri [Mr. Cr~nxl and adopted by the Senate would
District of Columbia and elsewhere Incurred by the Post Offce ato~etemkn fcnrc fIsrneo nut
Department In Performing the duties herein Imposed upon saiddatoiehemknofct tofIsaceranuy
Department, and the Secretary of the Treasury la hereby author- 'With private insurance companies, annuity organizations,
ized and directed to advance from time to time to the credit of the or trustees. One of the objection~s a great many of us had
Poet office Department from appropriations made foir the collec- to the amendment of the Senator from Missouri was that
tion and Payment Of taxes Provided under section '707 of this title,. eblee hr ol eacntncniuuadr~
such, gums an may be required for much additional expenditures w eivdteewudb acntn otnos n
incurred by the Poet Office Department in the performance at the currirg Incentive to companies buying such insurance eto
dutiss and functions required Of the Posta Service by this &ct have on their list of employees the best risks it Was porn­
9642 CONGRESSIONAL RECORD-SENATE JUNE 19
sible to obtain. In Other words, it is easy to See. if One considered an employer within the meaning of this act, but
btan Isuanc
comanycoud onItsemloyes ]]at the doespolitical any State
not Include the United States Government, oror any
nsuanceon ts mploeesallor
obtin oul
compny subdivision or municipality thereof, person
rate that would be accorded to young men from 20 to 30 subject to the Railroad Retirement Act.
while other companies retained In their employ employees (3) The term "employee " means any person In the service of
from 20 to 60, that the company which had the employees an employer
within the United States.portion of whose duties are performed
the major
from 20 to 60 would be compelled to pay a higher rate, and (4) The term United States ". when used In a geographical
the result would be that such company would be at a dis- sense, means the several States, the District of Columbia, and
tinct disadvantage in competing with the company which the(v Territories
The term of-pay roll and
Alaska Hawaii.
" means all wages paid by an employer
employed men of a lower age. temployees.
The Senator from Missouri believed and stated that he (6 The term ' wages' means every form of remuneration for
had avoided any danger on that score by reason of certain services received by an employee from his employer, whether paid
additions which he has made to his amendment since the directly or indirectly by the employer. including salaries, com­
he innceComitee Iam per-
tim I wan oferd missions, bonuses, and the reasonable money value of board, rent,
as oferd
timeitI theFinnceCommtte. Ihousing, lodging, payments In kind, and similar advantages.
fectly willing to concede that the amendment offered on (b) For the purposes of this title the wages of any employee
the floor by the Senator from Missouri was a distinct im- receiving wages of more than $7,200 per annum shall be -con­
provement in that regard over the amendment offered by sidered to be $7,20 per anm
him before the Finance Committee; but the amendment of from 2. There
SEc.each employer Unitedassessed,
thelevied,
shallIn be States for taxablean-nualy"
collected
andeach year an
the Senator from Missouri does not provide any method, SO exciso tax equal to 5 percent of such employer's pay roll during
far as I can see, to protect in the respects in which MY that part of such taxable year in which he employs 50 or more
amendment provides, employees and In which his employees were not covered by an
industrial protection plan adopted with the approval of the Social
Mr. CLARK. Mr. President, will the Senator yield? Seurity Board as hereinafter provided, and Announced to his
The PRESIDING OFFICER. Does the Senator from Ala- employees.
bama yield to the Senator from Missouri? Szc. S. (a) The Commissioner of Internal Revenue, with the
yii~i.approval
Mr. BACKx of the Secretary of the Treasury, shall prescribe and
Mr. CLACK. I haveld hda potntnwtoemiepublish necessary rules and regulations for the collection of the
the Senator's amendment and will state that, so far as I (b) Every employer liable for tax under this title shall. make a
am concerned, I am heartily in sympathy with it. return under oath within 1 month after the close of the year
Imposed
taxinIs which to the collector of
Mr. BLACK. I was sure the Senator would be when he with Internalrespect
revenue for the such
to which district Is located hix principal
understood the amendment, place of business. Such return shall contain such information
I can state in very few words what I have in mind. We and be made In such manner as the Commissioner of Internal
have had a good deal of information about the way holding Revenue with the approval of the Secretary of the Treasury may
by
prfit ot
compnie
pofis
compnie ou
pie of
pie o opratng ompnie. I anby
pertin comanis. antheCommissioner or noticeThe
regulations prescribe. fromtaxtheshall, without
collector, be assessment
due and pay-
insurance company can be so associated with an industrial able to the collector within 1 month after the close of the year
company that the insurance company can pipe the profits with respect to which the tax Is Imposed. If the tax Is not paid
from the industrial company through the insurance com- when due, there shall be added as part of the tax interest at
the rate of I percent a month from the time when the tax
pany by this means, it would obtain exactly the same re- became due until paid. All provisions of law (including penalties)
sullts, or certain individuals would, as though originally the applicable In respect of the taxes Imposed by section 600 of the
company insuring the men had made the profits. Revenue Act of 1926 sthall, Insofar as not Inconsistent with this
My mae
aendentwoud te boksof te isurnceact, be applicable
isurnceCommissioner
In respect of the tax Imposed by this act, The
may extend the time for filing the return of the
My aendentwoudmae te boksof te
company subject to inspection of the Government and would tax Imposed by this act, under such rules and regulations as. he
prevent any such unfair methods. One portion of the may, with the approval of the Secretary of the Treasury, pre-.
amendment would prevent rebates being made by an inur scribe, but no such extension shall be for more than 60 days..
anco cmpay
a idutril ompnywhee hemen (c) Returns required to be filed for the purpose of the tax
work, andpanyother provistion ompanprevent itherlcigImposed by this act shall be open to inspection In the same ma-
an anthe wuldPrevnt ntelocingner, to the same extent, and subject to the same provisions of
work proisin
directorates and interlocking stockholders. In that way it law as returns made under title 31Iof the Revenue Act of 1926.
appears to me the amendment of the Senator from Misouri (d) The taxpayer may elect to pay the tax in four equal
Is geaty tsrenghend
is geaty
srenghend
t acomplsh
he xactpuroseforinstallments, in which case the first Installment shall -bepaid on:
acomplsh he xactpuroseforthe date prescribed for the filing of returns, the second install-
which he offered It on the floor of the Senate. Since he has ment shall be paid on or before the last day of the third month,
no objection, and I have shown my amendment to the Sen- the third installment on or before the last day of the sixth month,
atorfro ~Mr NewYorWANER andIt eetswit i~ and the fourth installment on or before the last day of the ninth
appr roval uNiessor thee r.som furheq NER d estio yiedthehi month after such date. If any installment is not paid on or
her issom
apprval uness furherquetionI yeldthebefore the date fixed for its payment, the whole amount of the
floor. tax unpaid shall be paid upon notice and demand from the
The PRESIDING OFFICER. The question Is on agreeing collector.
to the amendment of the Senator-from Alabama. (e) At the request of the taxpayer, the time for payment of
areedto.any
The asmendent initia installment of the amount determined, as the tax by
areedto.the
The asmendent taxpayer may be extended, under regulations prescribed by
The PRESIDING OFFCER. The billis open to further the Commissioner, with the approval of the Secretary of the Tress-
amendment. ury, for a period not to exceed 6 months from the date prescribed
Mr. r.EORE. resient Ifthee ar nofurherfor the payment of such installment. in such case the amount
aMendmEntsGto beroffresdetotitl If andr tite no ofurther in respect of which the extension. is granted shall be paid (with
billdIewish to beoffereat thi timle IIandutstleut for tihe interest at the rate of one-half of 1 percent per month) on or
ishtohistim a ubsitut, fr ttle1:1before the date of the expiratlon of the period of the extension.
ffe I at
bill
and title VMI; that is, the Federal old-age benefit pro- SEc. 4. (a) There Is hereby established a Social Security Board
visions. (hereinafter referred to as the " Board ") to be composed of five
RESDIN Te Seato frm Gorga mmbers, one of whom shall be designated as chairman, to be
TheOFICE.
offer anRaEnIDmeNt inthe nture ofnatsubstituteowhich appointed by the President, by and with the advice and consent
offes a i amedmet
thenatre o a ubsitut, wichof the Senate. Not more than three of such members sthall be
Will be read. of the same political party, and In making appointments members
Thelerkrea
egilatve thth amndmet Ii th naureof different political parties shall be appointed alternately aS
lerkrea
7be egilatve amndmet th naurenearly as may be practicable. No member of the Board shaLl
of a substitute, as follows: engage in any other business, vocation, or employment, Th*
chairman shall receive a saary at the rate of $10,000 per annum
Tr=Z I-IDVuSTrIazs PZOTEOTWOS and each of the other members of the Board s0hall receive a salary
SUCT10N 1. (a) When used In this tttle, unless the context other at the rate of $7,500 per anuEach member shall. hold oe
(1) Thecterm"esn en idvdaascitoprnr for a term of 5 years. except that (1) any member appointed to
mens ndivdua. asocatin, arter-fill a vacancy occurring prior to the expiration of the term for
(1) he erm"peson
ship, or corporation, which his predecessor was appointed shall be appointed for the
(2) The term "employer"I means any person in the United remainder of such term and (2) the terms of the members first
States who at any one time during the taxable year employs 50 taking office shball expire, as designated by the President at the
or more employees, and any group of persons In the United time of nomination, one at the end of 1 year, one at the end of
States engaged in the same field of Industry which group at any 2 years, one at the end of 3 years, one at the end of 4 years and
one time during the taxable year employs 50 or more em- one at the end of 5 yewrs from the date of enactment of this sot,
ployses and which In formed voluntarily for the purpose of being it shall be the duty of the Board to carry out the provisions ag
 1935 CONGRESSIONAL RECORD-SENATZ 9643
this Met and to make an annual report to the Prsdent concerning payment of the aninimum schedule of beneftb% specl~ed In ti
Its activities. act.
(b) The Board Ia authorized to appoint, subject to the civil- Sze. S. An employer who to financially unable to provide the
service laws, such officers and employees as are necessary for the reserve necessary to cover the pension liability arising aout of the
execution of Its functions under this act and to fix their salaries past years of service of active employees, previous to their retire­
In accordance with the Classification Aut of 1923, as amended. ment age. may make application to the Secretary of the TreasUry
The Board is further authorized to make such expenditures (in- for a loan up to the amount of such liability. The Secretary of
cluding expenditures for personal services and rent at the seat the Treasury, under Ouch rules end regulations as he may pre­
of government and elsewhere, for law books. books of reference scribe, Is authorized and directed to make such loans In the form
and Periodicals, and for printing and binding) an may be neces- of negotiable bonds to be known as " social security bondsI and
sary for the execution of Its functions, which shall bear Interest at the rate of 4 percent
SEc. 5. At the close of each taxable year for which a tax Is Such loans shall bear Interest at a rate not In excess ofper annurm.
4% percent
Imposed by this title, the Board shall certify to the Secretary of per annum, and shall be amortized over a period not In excess of
the 'Treasury, for the purpose of exemption from such tax, the 30 years from the date of the loan. The money accruing froM
name of each employer whose employees have been covered during the difference between the interest paid on such bonds and the
such year by an industrial protection plan approved by the Board, Interest received on such loans shall be held In the Treasury Ms
together with the portion of such year that the employees were a contingency reserve to protect the United States against lee
so covered. through the failure to repay any such loan. At the end of each
SEC. 6. Subject to the limitations of this title, the Board shall 5-year period after the date of enactment of this act, so much
adopt and make public standards for Industrial protection plans of the unused surplus In such contingency reserve as, In the
and such rules and regulations as are necessary to carry out the opinion of the Board, can be distributed without
provisions and purposes of this title. Any employer may submit solvency of such reserve shall be distributed to the endangering persons makinc
t~he
to the Board an Industrial protection plan, and the Board shall payment on such loans In the proportion which the pa7--t`~
approve such plan If It comples with the Standard fixed by the each bear to the total amount of such payments during such
Board. If at any time the Board finds that a plan which It has 5-year period.
approved does not in operation comply with the standards fixed ISzc. 9. Deposits in the fund from which benefits are to be paid
for such plans, It may withdraw Its approval and shall immedi- under an Industrial protection plan approved by the Board may De-
atelY notify the employer concerned of such action. it shall be deducted from the gross Income of an employer for the purpose
the Policy of the Board to allow each such employer as much of computing Income taxes to be paid by him to the United
freedom In determining his plan as is consistent with the purposes States.
of this act and the adequate protection of the fund from which Sac. 10. There is hereby authorized to be appropriated annually
benefit payments are to be made, for the administration of this act the sum of 61,250.000. From
SEC. 7. The standards adopted by the Board shall provide- such appropriation the Board Is authorized and -directed to pa7
(a That a plan to be approved shall provide (1) that the em- to each State maintaining a cooperative State office for the ad-
ployer will pay annually into a reserve fund deposited with some min'stration of this act, and furnishing an
trustee or other depositary acceptable to the Board, to be used of 612,500 to be used In the administration ofequal sum, the sum
such plan; and the
for the payment of benefits under such plan, an amount not less Secretary of the Treasury Is authorized and directed to pay to the
than the amount of earnings distributed by such employer as divi- Treasurer of such State the money so allotted.
dends or profits, or otherwise, during the same year until the Sac. 11. Sections 2 and 3 of this act shall become effective when
reserve fund is on an actuarially sound basis, and (2) that there- the Congress by appropriate resolution shall so provide,
after the employer shall make such payments when necessary to TnTLz 3fl-HoacasrAv Vn~rzac
maintain the fund on an actuarially sound basis.
(b) That the payment of benefits under an approved plan Shall SzmroN 201. For the purpose of providing a means of livelihood
begin not more than a year after the beginning of Its operation- for citizens who cannot secure employment in Industry or agrl­
that every employee who has been in the service of the employer culture at a living wage, the Social Security Board Is authorized
for shall
fr1year or more Iandbe eligible for benefit payments; and directediagsnwhc
to provide for the construction of self-supporting
homestea uhctznmyer IUelod
that the following minimum schedule of benefit payments shall be or adpemn
vilaeir Incwhic such citizensmaycear vlho
paid at the expense of the employer under the plan In full supe nthirnom fom terorc.
operation: Szc. 202. (a)'The Board shfall make loans for the 'construction
(1) In the event of the death of an employee, there shl be of homestead villages by any agency It approves
paid to his dependents or estate an amount equal to 8 months' taking as security for such loans first mortgagesfor such purpose,
on the property'
wages at the rate he was receiving at the time of his death, in respect of which the loans are made. Such loans may be made
(2) In the event of the disability of an employee, compensatio up to the full amount necessary
shall be paid in monthly installments to such employee while hoLs Property covered by such mortgages,to shall acquire and construct the
bear interest at a rate-
disablllty lasts, or until he reaches the age of 65, at the rate of not in excess of 5 percent per annum, and shall
one-eighth the wages he was receiving at the time the disability a period not in excess of 30 years from the date be amortized ame
of the loan. ., .
b The Board may constrtsct homestead villages under Its own
was anneployee(b
(3) Whenanepoe reaches the age of 05 he shall receive supervision and sell the homes or farms in such villages, and shall
annually for life an Annuity equal to 1 percent of his total wages nortize the unpaid portion of the purchase price over a period
during his period of employment, payable in monthly Installments,. fteprhs not
rc tart
excess
hrigItrs
of in nupi 5oyasperce ont
e
(4) In the event that an employee becomes unemployed and h ucaepie tart o neceso ecn e
cannot find other employment by complying with regulations pre- ane.20(aThDisonfSustecHmsedsIte
scribed by the Board he shall be paid compensation for 1 year at (a)rten
ofthe DIvisrionofdSubsistncetHomestasi the
P
the rate of one-fourth his average anknual wage for the precding Deateto heItro n alfntosof teFderal
5 years, payable monthly. Emergency Relief Adimnistration and the Agricultural Adjust­
(5) If the period necessary for establishing on an actuarially ment Administration with respect to subsistence homestead proj­
sound basis the fund from which benefits are to be paid ha- no ects are hereby transferred to the Social Security Board, together
elapsed, benefit payments may, subject to the. approval of th with all powers and duties relating to each.
Board, be proportionately reduced or continued for a proportion- (b All official records and papers now on file in and pertaining
ately shorter period. exclusively to the business of. and all furniture, office equipment.
(c) hatanlanshal
pproedprvid tht emloyes ayand other property now in use In, said Division of Subsistence
at their election, make contributions to the fund from their wagesHoetasranpr.
(such contributions to be deducted from the employees' wages gency Relief AdministrationvionoreconfthFdrl or of the Agricultural Adjustment
-n­
and paid Into the fund by the employer, if the employee so re- -Administration whos Principal duties relate to subsistence home­
quests); that the benefit payments will be increased proportion- stead projects, are hereby transferred to said Board.
ately by such employee contributions; that the employer will con- (c) All officers and employees engaged primarily in carrying
duct an educational program designed to demonstrate to hi out functions transferred
employees the advantages of such contributions; and that the ferred to the Board withoutto change the Board under this act are trans-.
in classification or compense­
employees contributing shall have a right to participate in the tion; except that the Board may provide for the adjustment at
management of the plan. such classification or compensation to conform to the duties to
(d) That an approved plan shall provide that an employer must which such officers and employees may be assigned.
pay the schedule of benefits speclfiedi in this act as his part of (d) All appropriations made or allocated
the protection plan Irrespective of any contribution which an carrying out any Of the functions transferred for the purpoee of
under this
employee may or may not make toward securing a similar sched- be available for the use of the Board La constructing oract shall
making
sue of benefits for himself, loans for homestead villages or In the completiou Of projech,
(e) That an approved plan shall provide for the exchange or transferred under this act.
tranfer of credits and funds upon the separation of an employee (e
i~-m the service of any employer, In a meanne that will fully pro- under All property held in the exercise ot functions transferred
this act shall be transferred to the Social Security DOaWd.
tect the Interest of the employee. Sac. 204. There is hereby created a revolving CC 61A,00,
(f) That employers may operate -their own plans and manage 000.000, which shall be used by the Board for the.fund acquisition and
their own funds on a trustee basis; theat employers may have their construction of, or the making of loans on hoetead villages
plans wholly or partly underwritten by insurance companies; under this act. The funds transferred under this act shall eon­
that employers may unite to pool their risks and pool their funds; stitute A Part of such fund; the President Is authorized to silo­
And that Participation In a Plan under the laws of a State may cate any unused funds at his disposal to such revolving fund.'
be considered the operation of an approved plan, if the State plan there is hereby authorized to be appropriated tar such revelvi"n
Complies with the requiremcnts for an approved pa.inCIsding fund such suts DAmay be necessary to Increase it to SI,,0M0,00.AW
9644 CONGRESSIONAL RECORD-SENATE JUNE 19
Bzc. 205. The Board Is authorized to prescribe rules and regu- corresponding part. of the pending bill, are in brief, as
latlons for carrying out the provisions of this title. Including follows:
rules and regulations concerning the organization and manage-
men illge,
ofhomstad
nt Iconisentwit te prpoes It makes possible and necessary one standard schedule
Ofnthi afhmsedctsgs o osse t h roeof benefits to be provided by industries throughout the
Mr. GEORGE. Mr. President, I wish to make it clear that Nation, thus insuring the desired result and putting all
I am not opposed to the principles or the provisions of Industries on a fair basis of competition, as is sought, it is
title I of the bill providing for grants to the States for old- claimed by the proponents of the Flederal old-age benefits
age assistance or what we know as the general old-age provision, or titlenIIof the pending bill.
pension provisions of the bill, nor to title M, grants to It preserves a real and needed degree of freedom to in­
the States for unemployment compensation admninistration: dustries, and to the States as cooperators In the adminis­
nor to title IV, grants to the States for aid to dependent tration of the act.
children; nor to title V, grants to States for maternal and It permits Individual Industries or groups of industries to
child welfare; nor to title VI, public-health work; nor to construct and operate their own plans, requiring only that
title VII, Social Security Board, because we recognize therethyaecurilyondndsfcettoildheti­
must be a board created to administer the several titles of lated benefits.
the bill; nor to titles IX and X, providing grants to the It permits employers and employees to receive the benefit
States for aid to the blind. Title XII, which deals with Of any saving they can effect by a wise and efficient man­
annuity bonds, I believe, has already been reJected. Nor agement of their own plans.
am I1opposed to title XII, the general provisions of the binl. It requires each industry to pay only the exact cost of its
In other words, with the exception of title II and the protection program, no more and no less, Instead of a filat
supporting tax title, title VMI, I am in full sympathy with pay-roil tax which does not represent the cost.
.the bill. It eliminates the need for a large army of Flederal ofince­
I am also In full sympathy with the purposes of general holders required by the pending act to administer it and
old-age benefits sought to be covered by the provisions of thus saves an excessively large and needless expense.
title 11 of the bill. I think it would have been much wiser It does not put on industries immediately a large finsa­
if the bill had provided for grants in aid to the States to cial burden which In a time of business depression may be
enable them to set up old-age benefits and benefits to cover a serious obstarle to recovery, but relates the expense to the
hazards in industry just as was done under title I in mak- process of reovery.
Ing grants in aid to the States for the purpose of providing It makes possible the payment of retirement annuities
old-age assistance. immediately instead of postponing them for a number of
Also, Mr. President, I have believed from the first, and years and does so without putting an undue burden on
in the committee supported a motion to the effect that we industries and without Increasing the public debt or the tax
should separate the bill into its legitimate and component rate.
i.arts. It Is obviously unfair to ask one to vote for a binl It makes possible the easy amendment of the act to
when there is a particular title in the bill to which he does enlarge its provisions for the scope of Its application an
not agree at all, although having full sympathy with the experience may require.
general objective sought to be accomplished by those who It enlarges the protection program to include death and
drafted and sponsored the bill. On the contrary, it is ob- disability hazards, as well as old-age and unemployment
viously unfair to Join with objectionable and essentially hazards, as provided in title II of the bill as it now stands,
different legislative proposals other highly desirable pro- all four of which are vitally related and constitute essential
posals for which many Senators would certainly -desire to parts of one program of unemployment.
vote. Every Senator no doubt would like to vote for the It requires all four programs to be put on a reserve brAsi
grant in aid to the States for old-age assistance, for aid to actuarially calculated to be sufficient, so that automatically
dependent children, for public health work, for aid to the they are financially sound, Instead of imposing on pay rolls
States for the purpose of assisting and caring for the blind. a flat rate which is only guessed or estimated to be sufficient.
Mr. President, in this connection I desire to say that, as It provides for the transfer of pension credits from one
originally drawn, the substitute which I have offered car- employment to another, so that each employer bears the
ried certain provisions imposing a tax, but, on mature de- expense only for the number of years an employee spent In
liberation and after exhaustive study, I ieached the conclu- his services, and an employee does not lose his reward for
sion that the taxing provisions as they now appear. in the years of faithful service by changing employment, The
bill itself could not be sustained against attack, and there- transfer of pension credits eliminates the temptation to
fore the substitute which I now offer as now modified pro- escape the payment of retirement benefits by discharging
vides for the Imposition of a tax, but only when authorized older workers, and is thus one of the effective means of
by the Congress by an appropriate resolution. removing the "dead line " from industry.
My substitute as now presented is a substitute for title II It will both stimulate and compel an Increase in the wage
and title VII of the bill reported by the committee. Myv standard of American Industry, because if the wage of a cer­
substitute provides against industrial hazards which are not tain class of employees ha~s not had sufficient margin to
covered in the bill before the Senate. My substitute grants enable them to pay their share of the cost, the act will have
greater and larger benefits. It does not undertake to cover to be amended by a requirement that employers pay the
all employees, but it does undertake to cover employees of a entire cost; but it will be a financial advantage to employers,
Common employer numbering 50 or more, and also pro- and a moral advantage in preserving the self-respect of em­
vides for separate groups in kindred Industries when such ployees, if the way is opened for emp,)yees to pay half the
groups taken together bring the total to 50 or more, cost of raising the wage to a cultural wage level as an earned
Since my substitute will appear in the RECORD In connec- right, rather than to have their share of the cost presented
tMon with my remarks, I do not propose to read its pro- to them by employers as a charity.
visions or discuss them more in detail at this time. Last, and most important of all, the substitute bill fur­
Mr. McKELLAR. Mr. President- nishes a self-supporting method by which a permanent live­
Mr. GEORGE. I Yield to the Senator from Tennessee. lihood may be secured by the large excess number of em­
Mr. McEMLAR. Is the Senator's amendment simply a ployees who have been displaced from Industry, and cannot
substitute for titles II and VIII, leaving the remainder of be reabsorbed in Industry or agriculture, and whose number.
the bill as the Senate has agreed to it? Is so large that It Is physically impossible to create arere
Mr. GEORGE. Entirely as the Senate has agreed to it. fund sufficiently large to support them In Idleness, even It
Mr. President, I wish to make a brief statement regarding it were desirable to supply wages without work. For thes
the susiue idle detached workers, who cannot be covered by any Indus­
The basic features of the substitute, which are offered In trial protection plan that Is sound and that will permit in­
the hope, at least that they are Improvements to replace dustry to function without undue and unnecessary retarding
 1935 CONGRESSIONAL RECORD-SENATE 964
influence and Impediments, the only Possible unemployment 7. A bill constructed on the principle of the George bill It
insuanceIs eployent.obviously the Only type of bill which can be operated on the
insuanc isempoymnt.basis of voluntary cooperation. Please observe that freedom Of
Mr. President, yesterday I had occasion to discuss the action -ts not only the method used for securing acceptance OC
questionable validity of title II and title VMI of this bill. the plan, but after Industries have adopted th ln sstated
I m orll tatinthcrti cureoftieiftile~ in the bill, they are given freedom in the maaeetand op­
I ammorllyceraintha
inthecouse f tmeIf itl I1eration of their plans. The principle involved here io On*eto
shall be enacted as it now stands, it will either break down of paramount importance. It Is not only the democratic principle
Its Own weight or it will come back under the condemnation of 'social control but Is the only principle suitable to the treat-
of a decision of the Court. For that reason primarily, and ment and development of humnan nature. Detail rules and reg­
th
espcialy
adptininc o th Clrk menimet, am ulations are adapted to dogs and horses. They need them be­
espeialydopionof
sncethe he larkamedmet, amcause they are dogs and horses. But 'what distinguishesa man
offering this substitute and making this statement; and I from a dog or horse is his use of moral judgments. Therefore
now ask that I may insert in the RECORD a statement pre- all social legislation ought not only to permit but stimulate the
pare E.Jackonan
byMr. enr xper inthefiel ofuaeof moral judgments. This Is what the George bill definitely
socale inur
y r nceEwho appered son pefrethFinance Cildorn aloms to do. But the Wagner bill will do conspicuous moral
socil hoinurace.
apeaed bforetheF~ldamage- to citizens, because It Is undemocratic, because It, like
mittee as a witness, and gave to the committee testimony the original National Security Act, contains detail rules and
when we were considering the bill now before the Senate. regulatlona. handed down from Washington to employers per­
The ICE RESDENT Isther obectiD? he C~ mting them no chance to use moral judgments. Men Properly
The ICE RESEENT.Is tere bjecio~t TheChar esent such rules or they would not be normal mnun. The Wagner
hears none. bill If adopted will no-doubt run the same course as the N. I. A,
ss asfoflws:bill.
The
Me
tateent
asfollws:nounced
satemnt
It will break down of its own weight and then will be pro-
unconstitutional. Thea, the work will be stopped and
THURGORZox UNSTUTrZ SOCKAr.-SECUunr M be more than wasted, because the work of unscrambling the
(A sateentby
enryN. ackon)machinery will of
have
theto George
(A tatmen E Jakso)S.
byHeny be done.
If a bil type were enacted, for the baeri
1. The large and Important part of the Wagner social-security reasons above stated, it will be observed that as a consequence
bill Is concerned with organized industries, providing protection the question of Its constitutionality Is wholly avoided. It Ia
against the hazards of old age and unemployment. The George eliminated. It could not be raised. The bill Imposes no pen­
bill is proposed as a substitute for this part of the Wagner bill alties and does nothing more or less than establish a bureau
and It also covers two additional hazards not provided for In the or board, whose function is clearly apecified and which offers
Wagner bill, advisory service and operates on the basis of voluntary coopers­
2. The two bills are constructed on principles which are tion, Therefore, as It stands the constitutional question Is In no
basically different; the Wagner bill provides that the Federal Gov- way Involved. If later the Congress should pass a joint resolis­
ermient own and operate the protection plans of Industry; the tion making the bill's penalties effective and the Supreme Court
George bill provides that the Federal Government's function be should pronounce It unconstitutionaL the only thing the Court's
limited to setting a standard schedule of benefits to be main- decision would affect would be the penalty clause and the hoaed
tamned, but permits industries a large degree of freedom in the could continue to do the work It had already begun -and there
management of their plans. The George bill is therefore In exact would be no wasted effect. It could continue to put the bill Into
accord with the American principle of democracy, which aims to operation under the sanction of public opinion instead of using
secure concerted action in the whole, while preserving freedom in two sanctions, public opinion and the tax penalty.
the parts. 9. If the board should succeed In securing the voluntary en­
rhe Wagner bill meets the problem by the use of state social.. listmenet of a large number of Industries In a plan, which they
Iam; the George bill uses. the principle of democracy. I have no found acceptable and beneficial both to employers and em­
objection to state socialism applied to this problem, as we have ployees. It is highly probable that the Supreme Court would
applied It to other problems, If this is the beat we can do. But I pronounce the taxing provision to be constitutional If Congress
believe the democratic method Is far more efficient In securing the decided to use It. For many years we have Imposed a tariff tax
desired results and far more helpful in the development of indi-. for an avowed purpose other than to. raise revenue, namely, to
vidual citizens, protect manufacturers against the hazard of foreign competition.
S. The George bill provides a much larger schedule of benefits No question of Its constitutionality has ever been raised. If
than does the Wagner bill, and yet this larger schedule of bene- then as a national policy we have imposed a tariff tax for the
fits Is made to be financially feasible, because of the freedom of protection of employers, we have a conspicuous and convincing
method granted industries to manage their plans, and because~ of precedent for Imposing a tax now under a social-security act for
the large needless operating expense eliminated by the George the purpose of protecting both employers and employees against
bill, and because of the financial assistance to Industries provided industrial hazards, which have become a menace to the national
In the George bill without additional expense to the Government welfare.
4. The chief distinguishing characteristic of the George bill' After a large number of Industries had adopted the plan and
here stressed, is that Its method of securing the adoption of demonstrated its usefulness, If Congress made the tax effective in
protection plans in American industries, Is not compulsion, but order to compel the participation of the remaining industries and
voluntary cooperation. The specified tax In the bill may be made It then the Supreme Court should declarp the tax provision to be
effective by a separate act of Congress, If, and when, It is found unconstitutional, we would have established a convincing basis and
to be advisable, ample justification for a constitutional amendment. This in a
5. The use of the voluntary method stipulated in the bill Im- natural and customary procedure, and by the frwamer of the Con­
plis
hesocal-ecult
tat bord haredwith the adminin'tr-stitution was designed and expected to be used whenever the pub­
pies tha the sc,oil- sert bard chaarged masf'eltigr Uc welfare required Its use. The Constitution was made for man,
tionof he ue ctwoud
al aailblemeas fr elis Ing " not mran for the Constitution. Thomas Jefferson stated in two
dustries In the plan, giving advisory service exhibiting the nature sotsnecsalta ed ob ado h idmadncs
and advantages of the plan, and explaining how the plan can be shoty sentmencesnal thatCneestittion be said:o the awisdoand necstt­
sityrfaamedingththCnstittioniHeesid:nsawsendbinsitu
opeateInxpesivonthemosbais.lions must go band in hand with the progress of the humanAT mind.
The board could give a rating, like a Federal Dun & Bra5d- We might as well require a mAn to wear the coat that fitted him
street's on a public governmental basis, thus giving public recog- as a boy as civilized society to remain ever under the regime of
nitlon. and honor to those industries, which adopted plans measur- their ancestors.'-
Ing up. to or approximating the standards stipulated in the bill. ItIs probable. however, that no constitutional amendment will
There would thus be exhibited the number of employers who do be required, because the question as to whether or not the George
voluntarily adopt the plan, also the number who are not willing type Of social-security bill is constitutional, does not involve a
to adopt It, also those who would be willing to adopt it. If it question of law, but an economic theory of the facts back of the
were made universal, so that they could be on a fair basis of law. The Nation has nory become so completely an economic unity
competition. This process would render an invaluable service In that we no longer have interstate commerce or intrastate corn­
exhibiting the need there may be for compulsory legislation. meros, we have just commerce. As soon as this economic fact Is
6. The education, Involved In the process of volunteer enlistment recognized as it Is the constitutionality of the George bill becomes
of employers, would create a volume of enlightened public opinion, a foregone conclusion even to a layman. The method of voluntary
which would clear the way for the easy passage of compulsory cooperation, which the bill provides for getting Itself into opera­
legislation, The assumption Is justified that a large proportion of tion, Is designed to make such a conspicuous exhibit of this eco­
employers will probably adopt the plan voluntarily, because aill nomic fact that the bill's constitutionality will never be raised.
employers are facing this problem wholly apart from any proposed Nothing is so convincing as a fact, as Chief Justice Hughes di-&
legislation and all intelligent employers recognise that Protection Cated in his dissenting opinion in the Railroad Rtetirement Act, fle
of worn-out human machinery Is not only just but also an eco- said, " Where the constitutional validity of a statute depends upon
nomic advantage, and because an employer who does not have the existence of facts, courts must be cautious about reaching a
such a plan will find It harder to secure and retain the right type conclusion respecting them contrary to that reached by the -leg-.
,of employee than the employer who adopts such a plan. and lature; and If the question of what the facts establish be a falml
because under this bill It will happen to employers as it does to debatable one, it is not permissible for the judge to set up his
soldiers that an element of distinction and honor attaches to a, opinion In respect of It against the opinion of the lawwmaker."
citizen who Is a volunteer soldier rather than to one 'who Is 10. I am Informed that no bill of this character has ever bee
drafted and conscripted under compulsion. Whatever the number proposed or passed by the Fesderal Congress without effective pen_
of employers who may or may not freely adopt the plan, the altles attached. This Is probably true. That is the chef masef
voluntary method 'Will be an advantageous process as a prelim- why It should be passed now as a new legislative prooedure pt S
mnarv to the use of compulsion, 'which will affect not thorse who likewise true that hitherto no social-security bill has been
have bl that time adopted the plan. but only those vWh have not, by tMe Pederal Congress. IMis a new -kind at legislation Bap,[h
9646 CONGRESSIONAL RECORD-SENATE JuM 19
a complex industrial problem. and therefore requirem newlOW1gb- The~editorial Is as follows,
lative procedure. New wine calla for new bottles.
Even If we knew that the tax penalty would be ultimately neces- [Prom the New York Times of June 17. 19351
sayitwoldbewise and helpful to use the method of voluntary TEXl sociax.-s3zcuuv esU.
cooperation as a preliminary process on the way to our desired goal. The Senate seems to be on the verge of debating only perfunc­
The shortest distance between two points is the line of least resist' torily and passing quickly the full social-secutrity bill already passed
ance. As far as It Is feasible, the more excellent way is to reward by the House. It seems almost too late to hope that a measure of
men If they do. rather than to punish them If they don't, so sweeping a nature will receive the close and careful study It
it is a curious circumstance that we still persist in believing deserves. The case for splltting It Into Its constituent parts. ls a
that the only effective legislation possible must have attached to ston one. It would obviously be desirable to break It Into at
It a penalty like a fine or imprisonment, whereas It has been re- least three separate measures--one providing for Immediate old-age
peatedly demonstrated that such penalties have been futile In assistance and Federal contributions for maternal and child aid, a
securing observance of a law if it is not supported by public opin- second providing for unemployment insurance, and the third pro­
ion. The prohibition law as a dramatic case In point. The demo- viding for permanent old-age insurance. Only after such a divi­
cratic method is the method of freedom and. despite Its obvious sion would each section be likely to receive suffcient consideration.
defects, democracy Is the most efficient form of government yet de- and to-be voted upon as Its merits deserve.
vised. Am Illuminating definition of freedom, the only real freedom The whole contributory old-age-pension scheme In particular
which I think we possess, would be that It Is voluntary obedience ought to be postponed and turned over to an expert commission
to self-recognized. law. for study. As It stands, It inmposes ri gradually rising tax on both
While the method here proposed applies with special force to leg- employers and employees, which at the end of 10 years, it has been
Islation dealing with industrial problems, such as the social-security estimated, will amount to *1,700,000,000 a year. This In Itself
bill does, yet It Is a wise working formula for many other types of would mean an added tax burden equal to nearly half of the exist-
legislation, because it ought to be obvious that it is not physically Ing total Federal ta~x burden. Further, It would result, It has been
possible to put any law Into effective operation unless we flrht calculated, In the accumulation of an eventual reserve fund of the
secure a large measure of voluntary obedience to It. The George Immense total of $32,000.000,000. The problem of managing such
bill Is definitely designed to secure as large a measurs of voluntary a reserve fund, and its possible social and economic effects, have
obedience as possible to a law recognized as wise and desirable, not yet received anything like adequata, study. Alternative types
We will dispense witb penalties If we can; we will use them It we of old-age pensions ought to be considered.
must. Nothing has yet beeii done, again, about amending the majmr
Mr. GEORGE. Mr. President, I have only this to say defects of the unemployment Insurance plan as It stands. It still
furterubsitut,
pon he I doe no cary imedatedoes not provide thst the workers shall contribute for toward their
furter ponthesubtitte.
It oesnotcary imedateown Insurance, In spite of the convincing arguments this prac­
compulsion, or attempt to do so, for the reasons I have tice and the fact that It prevails in virtually every such system
already stated; but it is the first attempt to offer an induce- abroad. And it still, for no good reason that It would be possible
ment through a Federal agercy to industry to provide su- to ers, instead of merely on that part which Is paid to workers employ
think of, levies a S-percent tax on the total pay rolls of atal
perior benefits to those specift~ed In title 3II of the pending covered by the Insurance beneftits
bill. Not only that, but it makes possible the doubling of Mr. McCARRAN. Mr. President, in view of the fact that
those benefits by voluntary contributions by the employees there may be no roll call on the substitute offered by the
themselves, though it does not relieve the employers from SeaofrmG rga[ . ztz]an sictheae
granting greater benefits than title II of the bill providesSeaofrm eria M.Golx]an sncteeae
and covering two additional hazards to which I have already some of us who are more interested in the subject matter
directed attention. It also holds out a strong inducement to of old-age security than In the letter of the pending bill,
employers to adopt this program by prcviding for loans from which iWall probability will be passed by the Senate, and as
the Treasury in the form of security bonds, but to be re- there may be some of us who seriously doubt whether the
tained in the Treasury as its protection, so as to enable in- bill, If enacted into law, can receive the sanction of the
dustry which has not In the past made suitable provision Court of last resort, without taking up the time of the Sen­
of a reserve fund to support the plan set out in the bill, or ate, but entertaining an entirely sympathetic idea toward
Its equivalent. That makes possible also the transfer of provision for old-age security and social security through a
credits, which, of course, is an essential feature of any constitutional measure, which I do not believe will be passed
security plan, or of any system which undertakes to provide here today, I desire to be recorded in fiivor of the George
against industrial hazards, amendment.
Mr. President, I am not only convinced of the desirability Mr. BORAH. Mir. President, I may say just a word. al­
of such'a course, but I believe it will be to the real Interest though it is not directed to the particular amendment now
of the country to have an opportunity to consider more penlding, but rather to the bill.
deliberately, and separated from other admittedly im- The question of the constitutionality of title II1 has been
portant proposals in a long and involved bill, the problem raised and discussed. I presume we all recognize that title
we are discussing, and with which I have dealt in the II does present a serious question. I do not think It Is free
amendment. If and when titles II and VII of the bill shall from doubt. But my vote on the bill will not be controlled
be again before the Congress we shall be able, I hope, to by the constitutionality or unconstitutionality of title IL
work out a program which will provide against the indus- There are provisions in the bill the constitutionality of
trial hazards which ought to be provided against as a part which cannot be doubted, and I favor those provisions.
of the cost of doing business. The bill provides that in case of any portion of the mess­
Attached to the substitute is also provision for self-sup- ure being held unconstitutional, the holding shall not affect
porting villages, either of the subsistence homestead typ other portions. Even if that provision were not in the bill,
or of any other type of homestead with which the Congress I think the courts would apply such a rule. In view of the
has dealt, in recognition of the fact that so large a percentage portions of the bill which seem to me wholly unquestioned
of our working people have been unable to find employment, and which I favor, I shall vote for the measure.
and will through a relatively long period be unable to find The VICE PRESIDENT. The question is on agreeing to
employment until some way of providing employment shall the amendment offered by 'the Senator from Georgia [Mr.
be found. The benefits granted under title II of the bill GEoRrE] in the nature of a substitute for title II and title
when they are analyzed will be found to be exceedingly vimI
meager, and there are large groups of our population which The amendment was rejected.
will not participate at all in the benefits of title IL ~Indeed, Mr. HASTINGS. Mr. President, I send an amendment to
.out of some forty-five to fifty million people who ordinarily the desk and ask to have it'read.
and normally are gainfully employed in the united States, The VICE PRESMDENT. The clerk will state the amend­
approximately one-half only will be affected by title 3IL . ment.
Mer. President, I ask to have inserted as a part of my The LzoxsrA~xz CLERK. It Is proposed to strike out Utht
remarks an editorial which appeared In the New York limes II, beginning In line 15, on page 7, and ending In line 12,
of June 17, entitled " The Social Security Bill," as bearing page 16.
upon what I have tried to emphasize-the necessity for more Mr. HASTINGS. Mr. President, the purpose of the
careful and more exhaustive study of the subject unem- amendment is to strike out title II of the bill. As everyon
barrassed by other legislative proposals knows, this title refers to the plan for annuities. I die-
,The VICE9 PRESIDENT. Without objection It Is so cussed the matter at length on Monday, and do not cmr
ordered. mow to take the time of the Senate, but I should lMk to adk,
 1935 CONGRESSIONAL RECORD-SENATE 9647
if thereIso be nofurtherdiscuson with respecttoIt, that miillions who will not receive old-age benefits under titles
we have a yea-and-nay, vote on the amendment. 3II and VIII. assuming that those provisions shall be held
The VICE PRESIDENT. The question is on agreeing to constitutional, will, If they obtain any relief, be compelled
the amendment of the Senator from Delaware, on which he to avail themselves of old-age assistance or pensions, Pro­
has asked for the yeas and nays. visions for which appear In title L
The yeas and nays were ordered. I wish a sound and satisfactory measure were before u1s
Mr. HARRISON. Mr. President, let us have the amend- to encompass the entire questions with which the measure
ment again stated., before us attempts to deal. In view of the fact that the biD
The VICE PRESIDENT. The clerk will again state the does have provisions of merit which I approve, and In view
amendment. of the separability of the provisions, I may feel constrained
The CHIEF CLERK. It Is proposed to strike out title II, be- to vote for the passage of the bilL, though belleving the
ginning in line 15, page 7, and ending in line 12, page 16. titles referred to to be unsound from a constitutional stand­
Mr. KING. Mr. President, it is not my purpose to detain point.
the Senate but for a few moments. Yesterday I submitted Mr. President, as I understand, the American Associationl
some observations concerning the pending bill and directed for Social Security, with headquarters at 22 East Seventeenth
Particular attention to titles 3II and VIII. I stated in sub Street, New York City, has been active in attempting to
stance that the bill under consideration had a number of secure pensions and social-security legislation. I am advised
admirable features which commanded my support, but tha~t that Mr. Epstein is connected with this association and, as
in My opinion titles II1 and VIII contained provisions which Senators know, he has for many years earnestly sought to
would not be sustained when challenged in the courts. It Is secure State legislation pioviding for old-age pensions. I
believed by many-and I am among that number-that in am in receipt of a memorandum distributed by, this organi­
view of the other provisions of the bill there should be legis-. zation a short time ago, which contains 'an analysis of
lation of a supplemental charactra' providing old-age bene- H. R. 7260, and which gives some attention to title II and title
fits. I regret that steps have not been ta~ken, and legislation VIII of the pending bill. It states that the provisions In
Proposed of a constitutional character, that will accomplish these titles place the largest burden of the future support
the desired results and afford suitable and adequate an- of the aged upon the workers and industry. Reference Is
nuities or old-age benefits for the class of individuals corn- made to the enormous reserves which will be built up.
Prised within the provisions of titles II and VIII of the pend- These reserves will be frozen for many years. The committee
Ing measure. However, the provisions of these two titles do estimates that under this bill there will be a reserve fund of over
not reach all the persons above the age referred to, and, 10 billion dollars by 1948 and the reserve will amount to ove
indeed, deal with perhaps not exceeding 50 percent of those 32 b1il1o.1 dollars by 1970. Such enormous reserves are unprece;­
over the age of 65 years. dented.
The Senator from Georgia [Mr. GEORGE] has referred to The statement further continues:
this matter and pointed out in a clear and comprehensive The removal of so much puirchaa'ng power In the next few
manner the defects in the present bill and the necessity, if years may hamper recovery and cause great social 'harm. It Is
the objectives sought are to be attained, of adopting a differ- extremely questionable whether our economic system can stand
ent plan from that found in titles II and VIII. As stated, the withdrawal of so much needed pur--haslng power.
there are provisions in the bill the constitutionality of which The statement further continues:
cannot be questioned, and which possess merit and should be In setting up such high contributions the biut places a beck­
enacted into law. The bill before us contains separate proVi- breakling burden upon the present generation. The younger gener­
slons and separate titles. Tbey are as disconnected or sepa- ation, as taxpayers, will not only have to pay the cost of the non­
contributory pension system, as well as the largest part of the
rated as though they were InI separate bills, benefits under the contributory system for those now middle-aged,
The bill contains, as Senators know, various titles Which but will be forced to provide fully for Its own old age.
are so complete in themselves that the elimination of one or It Is further stated that-
more would not mar or destroy those remaining. Believing
as Ididtha
I ad VIItiteswre ubjct o chllege pon The plan under this bill Is to build up large reserves out of
as IIandVII
di tht ttle wee sbjet t chllege poncontributions by employers and employees In order to make the
the ground of being unconstitufional, I took the position, plan self-sustaining in as short a period as possible, so as to relieve
when the Commnittee on Finance first began the consideration the Government from much of Its expenditures on non-contribu­
of the bill, that it should be divided Into separate bills an tory old-age pensions. We believe that self-sustaining annuities
eachseprat
beconideed
par a anindpendnt easre.cannot be wisely built up In a short period, and that It Is especi­
eachseprat
beconideed
par a anindpendnteasre.anlY unwise to accumulate large reserves from contributions levied
I especially urged that the consideration of titles II and VIII largely upon wage and salaried workers without any help from
be deferred until the other provisions of the bill had been the Government out of funmds derived from the higher income
acted upon. Moreover, It was my opinion that sufficient recipients in the Nation.
study had not been given to the question of old-age benefits, Without assenting to all of the statements above quoted,
with the intricate and technical questions involved, and that they furnish, it seems to me. sufficient reason for a further
in view of the fact that if the bill as presented were enacted study of the important question of old-age annuities. The
into law titles la and V3II would not become effective for statement further continues:
approximately 2 years, it would be the part of wisdom to In view of the technical complications of the subject It would
defer action upon the question of old-age benefits until the probably be advisable to strike out completely titles II and VIII
next session of Congress. from this bill. A congressional committee should be created to
There are some Senators and many other persons who have std hesbetoutegadrpott henx eino
given attention to the provisions of the bill, and particularly
to titles II and VIII, who have serious doubts as to the con- I have called attention to this statement because of the
stitutionality of the same. I believe that a definite plan study which has been given to pensions, old-age insurance,
should be provided which would embrace a larger part of ou old-age benefits, and so forth, by the organization from
population'than is covered in the provisions of the titles whose statement I have quoted.
referred to. The view is entertained by many that to provide The VICE PRESIDENT. The question Is on agreeing to
old-L ge benefits for perhaps less than one-half of our popu- the amendment offered by the Senator from Delaware [Mr.
lation over 65 years of age does not meet the situation or deal HAsTINGS] to strike title 3II from the bill. The yeas and nays
with the problem In a satisfactory mannepr, have been ordered, and the clerk will call the rol..
It Is obvious that if the bill in its present form is enacted The legislative clerk proceeded to call the roll.
into law, hundreds of thousands, and indeed millions, of Mr. KING (when his name was called). Upon this; votie
those reaching the age of 65 years, not finding any,provisions I have a pair with the Junior Senator from Califormia (Mer.
for relief in the old-age benefit features of the bill, will be McAnoo], and in his absence I withhold my vote,
'relegated to title L. thus Increasing the contributions to be Mr. LA, FIOLLETE (when Mr. Nyies name was called).
Made by the States as Well as the Federal (gOverrnment. The6 I desire to announce that the Senator from NorthL Dekats
 9648 CONGRESSIONAL RECORD-SENATE JUNE 19
[Mr' Niz] Is detained by illness. He has a pair with the Unent, and he has stated that he has no figures to show
senior Senator from Virginia [Mr. GrAss]. If the Senator whether or not its adoption would greatly reduce the
from North Dakota were present, he would vote ".nay."1 amount contemplated to be raised under the bill. I have
The roll call was concluded, asked that he accept the amendment and take it to con­
Mr. ROBINSON. I de-sire to Announce that the Senator ference, and find out in the meantime whether or not it
from Illinois [Mr. Lxwisl, the Senator from Montana [Mr. would seriously interfere with the amount. He has not
MURRAY], and the Senator from Oklahoma [Mr. THowAsI definitely promis~ed, but I think, he Is about to do so.
are necessarily detained from the Senate on official business. Mr. HARRISON. Mr. President, of course the Senator
I am advised that these Senators would vote "nay" if from Delaware knows that personally I would do any­
present. thing in the world for him: but this amendment Is rather
I wish also to announce that the Senator from California involved, it is uncertain in its terms and in its effect, and
[Mr. McAnoo], the junior Senator from Virginia [Mr. BYRD], I fear it is really so important that I should rather have
the Senator from Missouri [Mr. CLARK], the Senator from the Senate pass upon it.
Nevada [Mdr. MCCARRANI, the Senator from Kentucky [Mr. Mr. HASTINGS. Mr. President, this amendment has
LOCAN], and the senior Senator from Virginia [Mr. GLAss], been suggested by the service industries. The particular
are unavoidably detained. industries interested in the amendment are those which
Mr. BULKLEY. I repeat the announcement of my gen- are conducting the beauty parlors. There are 57,000 rec­
eral pair with the senior Senator from Wyoming [Mr. ognized shops, employing 240,000 people, doing a gross
CAREY 1.Not knowing how he would vote on this question, annual business of $400,000,000, with certain fixed obliga­
I transfer my pair to the junior Senator from Utah [Mr. tions in connection with leases and equipment and taxes
Tnoxus], who is detained on important public business, and which cannot be passed on, and which, having the prac­
vote "1nay.", tical effect of a 25-percent reduction of the gross business
Mr. HAYDEN. My colleague, the senior Senator from done, must necessarily be absorbed in the nonfixed fac­
Arizona [Mr. AsHRSIuar, is necessarily detained from the Sena- tors of the business.
a~te. If present, he would vote "1nay."' The object of the bill is to assist employees where prac­
The result was announced-yeas 15, nays 63, as follows: tically all the expense, or a large part of the expense, Is
YEAS-iS5 in the pay roll. In this particular industry It Is contended
Austin George Keyes. Townsend that It is not possible to pass on to the consumer the
Barbour Gore Metcalf Vandenberg expense in question, as will be done in most cases, and
Dcappern Hualeg Smtehe that 1 percent on the gross receipts is a suflacient tax to
Hstns NAYnsn
Steiwe place upon any Industry at this or any other time.
Adams Coolidge La Follette Radcliff I hope the chairman of the committee will consent to
Bachman Copeland Lonergan Reynolds take the amendment to conference, and ascertain just what
]Bailey Costigan Long Robinson effect a tax of 1 percent on this industry'will have upon
Bankhead Davis McGill Russeil
Darkley Dteterich McKellar Rh1 the bill itself.
Bilbo Donshey MeNary Schiwellenbach The VICE PRESIDENT. The question Is on agreeing to
Black Duff y Maloney Sheppard the amendment offered by the Senator from Delaware.
Done Pletcher Minton Shipstead
Brown Frazier Moore TrmelThe amendment was rejected,
Bulkley Gerry Murphy Truman Mr. GORE. Mr. President, the amendment I intend to
Bulow Glbson. Neely Tydingsofetrcsvrclslthamn etofrdbyhee-
Burke Guffey Norri Van Nuysofetrcsvrclslthamn etofrdbyheS -
Byrnes Harrison O'Mahoney Wagner ator from De~laware [Mr. HAs~rNlcs] except that his amend.
Caraway Hatch Overton Walsh ment would affect some large concerns, such as the large
Chavez Hayden Pittman Wheeler tlpoecmaisadtelretlgahcmais n
Connally Johnson Pope tlpoecmaisadtelretlgahcmais n
NOT Vo'rNGo-z' the like. The Senate has Just rejected his amendment.
Aahurst Couzens McAdoo Thomas, Okla. The Pending. bill imposes a tax of 3 percent on the pay
Borah Glass Mccarran Thomas. Utah rolls of all employers included within the terms of the meas­
yDM King Murray
Carey Lewis Norbeck ure as a contribution to the unemployment insurance fund.
ClarkL Logan Nye A tax of 3 percent on the pay rolls of individuals and part.
So Mr. Hm~sruqos' amendment was rejected. nerships engaged in rendering personal services, such as
Mr. HARRISON. Mr. President, I offer a clarifying barber shops, cleanling and pressing establishments, beauty
amendment, which I send to the desk and ask to have read. parlors,. and the like, will in some instances amount to 25
The VICE PRESIDENT. The amendment will be stated. percent of their net earnings. A tax of 25 percent on net
The CmrE, CLERK. On page 3, line 13, after the word earn~ings is, of course, disproportionate and excessive, and
plan ", It is proposed to strike out "one-half "1; and in line would in some cases be destructive of the business itself.
14, after the word " collected ", it is proposed to insert: To meet this situation and remedy this injustice-to pro­
A part thereof In proportion to the part of the old-age assis- tect the little fish against the big ones-I am offering an
ance which represents the payments made by the United States, amendment tracking the amendment just offered by the
The ICEPREIDET.
Te qeston s onagrein toSenator from Delaware, but limiting the application of this
the VICenPReSIoferdETbythe quesation fo Misso geingipto 1-percent tax to firms and partnerships. In other words,
The amendment offeredeby theSntrorm.sispi my amendment provides that if 3 percent on the pay rolls
The as mendent
areedtO.of these small concerns exceeds 1 percent of their gross
Mr. HASTINGS. Mr. President, I offer r.n amendment earnings, then 1 percent of their gross earnings shall con­
which I send to the desk and ask to have read. stitute the limit of their payments rather than the 3 per­
The VICE PRESIDENT. The amendment will be stated. cent of their payrolls. This might prove a life preserver Jim
The CImw CLERK. On page 46, line 19, after"1 per centum. ", many deserving Cases.
It Is proposed to Insert: Mr. President, what I have primarily in mind is this: The
Prozide-d, ""ireer, That Lhe tax levied In this act to be paid amendment I offer will limit the tax on such concerns as
by the employer Shall not in any event exceed 1 Derceent of the Cleaning and pressing outfits, barber shops, beauty parlors,
gros reeipt he eploerand
ofthebusiessof small concerns which are engaged in rendering per.
And on page 52, line 24, after "per centum ", it is pro- sonal service. I have here a computatlen which I shall ask
posed to insert: nanimous consent to have printed in the 'Rgcoa. in
Provided, ho-ever, That the tax levied in this act to be ai some Instances 3 percent of the pay rolls of these small
by the employer shanl not in any event exceed 1 percent of the concerns will amount to 25 percent of their net earnings.
groes receipts of the business of the nmployer. That is unfair. It will either put these concerns out ot
Mr. HASTINGS. Mr. President, I have spoken to the business, or seriously cripple them. It will oblige them in
chairman of the committee with respect to this amend- many cases either to reduce the pay or reduce the numnbe?
 1935 CONGRESSIONAL RECORD-SENATE 9649
of their employees. Either of these resulta s imudesirable. Mr. GORE. Yes; that is a sort of a pocket veto,
MY amendment will limit it to individuals or to partner- Ca~ughter.] I send the amendment to the desk and ask
ships. It does not include corporations or stronger con- to have It read.
cerns Which could pay the 3 percent tax on pay rolls and The VICE PRESIDENT. The amendment will be stated.
survive. The Cms~r Cx~mix. On page 46. line 19, after the words
I hope the Senate will adopt this amendment and allow " per centum ", it is proposed to Insert the following:
It to go to conference, because there is certalinly justiflca- Provided, however, That the tax levied in this act to be peAd
tion or at least there Is reason Why we ought seriously to by the employer If an Individual or partnership ishall not inl SnY
consider the matter before we impose upon these little con- event exceed one percent of the gross receipts of the buslfl5s
cerns a tax which may put them out of business, and cer- Of -the employer.
tainlY will cripple them most seriously. And after the words "per centunt. , In line 24 on page 52%
At this point I ask unanimous consent to have printed it Is proposed to insert:
In the RECORD a statement showing how excessive this 3- Provided, howoever, That the tax levied In this act to be paid
percent tax is with respect to some of these simall Concerns, by the employer if an individual or partnership shall not In SAY
The VICE PRESIDENT. Without objection, it is so event exceed one percent of the gross receipts of the business OC
ordered. the employer.
The statement referred to Is as follows: The VICE PRESIDENT. 'The.question Is on agreeing to
To the Finance Committee, Senate of the United States: the amendment offered by the Senator from Oklahofli.
Memorandum suggesting the necessity and advisability of makn The amendment was rejected.
certain exceptions or modifications to the pay-roll tax ratesMr. GORE. Mr. President, I send to the desk an amend­
provided for by the economic-security bill so as to alleviate the ment, which I1ask to have read. The amendment speaks
unequally heavy incidence of the tax In those businesses where for itself. I have offered it before. I offer it once again.
the proportion of pay-roll expenditures to total business turn TeVC RSDN.Teamnmn ilh ttd
over is unusually highThVIEPEIET eamn etwi ested
We have been consulted In recent days by several business con- The CHmEF CLERK. It is proposed to add to the bill a new
cerns engaged in what might be called personal-service activities Section, as follows:
concerning the contemplated pay-roll taxes in the economic- S= -. Notwithstanding any other provision of law, the Presi­
security bill. As a result of Information submitted to us by them, dent Is empowered in his discretion to allocate funds appropriated
as well as an independent investigation of our own Into the statis- by the Emergency Relief Appropriation Act of 1935 for the pur­
tical and operating aspects of various types of personal-service pse ot making payment or settlement, in whole or in part. In
businesses, we feel that these clients are justified In their convic- cPhOrothinalm tpan(saybagedunbtwe
tiontha teirclas
buinesesof wll uffe Irepaabl daagethe President and the beneficiary) of adjusted-service certificates
If the pay-roll taxes are applied categorically without regard to issued to the veterans ot the World War, less In any cas the
the unusual operating factors Involved. amount of any loan or indebtedness secured by such certlflicate:
It is obyvious that a tax of 3 percent on pay rolls (considering Provided, That the amount of said funds required to carry out
for the moment merely the tax for unemployment-Insurance the provisions of this section Is hereby made available for such
purposes) may have a relatively light Incidence upon an Industry
In which the pay-roll expenditures constitute a small proportion proe
of the gross Income, say 5 percent to 15 percent. In some bust- r
Mr. GORE. Mr. President, do not Intend to discuss this
nesses, and this Is especially true in organizations of a personal- amendment. I offered the amendment in the committee, and
service character, such as laundries, barber shops, beauty parlors.
telephone and telegraph companies. etc., the pay-roil expenditures; It was voted down. I have discussed it on the floor of the
may, and usually do, constitute 50 percent or more of the total Senate. It simply authorizes the President, in his discretion,
business turn-over. For example this figure Is reported to be to make payment of the soldier's bonus in whole or in part.
60 percent for the telephone industry, and 715percent for theIncsornthisalm tpaornsuhwysmy
motion-picture production Industry.Incsorothintlm tpa.ornsuhwysmy
Perhaps a concrete mlustration will help to demonstrate the be-agreed upon between the President and the holder of the
effect of the application of the contemplated tax on a business certificate. It is purely in the discretion of the President,
with an unusually high pay-roll factor. In the beauty-shop There is nothing mandatory about it.
industry the pay-roll averages about 52 percent of the gross
Income. The net income in the industry Is estimated at about I have offered the amendment before, and In order to
6 percent of the gross business. The tax of 3 percent on the keep my record straight I offer It again. I think thIs Is a
pay rolls would be equal to 1% percent of the gross income, or judicious way in which to pay the bonus in whole or in part
25 percent of the net income. As consumer habits and standards
will make It largely impossible to pass any substantial par of this at the present time. It is the only way In which It could
tax on, It becomes tantamount to a tax of 25 percent on the net be done. This is perhaps the last bill to which such an
Income, or a reduction of 25 percent in the gross business done, amendment would be appropriate. It Is appropriate, it is
.This industry has 57,000 recognized shops, employing 240.000 pertinent, to this social-security bi1L.
people, and does a gross annual business of $400,000.000. With
certain fixed obligations in leases and equipment a tax which Mr. LONG. Mr. President, at this point I desire to place
cannot be passed on, and which would have the practical effect of in the REcoRD a statement in a few words as to my vote onL
a 25-percent reduction of the gross business done, must necessarily this bill. I am going to vote for this amendment alse. My
be absorbed in the nonfixed factors of the business. It Is bound,
therefore, to have a depressing and dmamaging effect upon wages vote will be recorded in favor of the bill, though not be­
and salaries In the industry, cause I think the bill will do any good. I think the binl ilk
It would seem that there Is a reasonable and practical solution the long run probably will do harmo, averaged up one side
of this difficulty consistent not only with the purposes of the and down the other, as I expect it to be administered. I do
economic security bill but also In harmony with the larger
economic and social program of which It is a part. We believe not see much chance of very much good being done by it.
that this could be accomplished by amending the pay-roll tax However, the old-age pension and unemployment relief
provisions and rates of the bill so that they would In effect features of the bill I originally speilsored in the Senate In a
provide that the pay-roll tax at the existing rates should not
exceed 1 percent of the gross business of the employer. Such a resolution I submitted and in a' bill I introduced, and I
modification would sufficiently alleviate the unduly heavy and Would not have the public think this administration has in
unequal incidence of the pay-roil tax In such industries with a any respect been obstructed In what It claims to be a gesture
high pay-roil factor to enable the tax to be absorbed without of pulcsevc.
pbisrie
the alternative consequences of either destructive absorption of
The bill Ls apparently Intended to do a great deal of good.
the tax by the business, Including Its labor, or a loss of business
but it provides for levying more taxes and probably Impos-
and consequent unemployment from consumer resistance to In-
creased prices. Ing a great deal more of burden than any good it will do;
Mr. GORE. I hope the chairman of the commlittee will and In its undertaking to make every man who draws IL
not object to this &amendmentgoing to conference. pension establish himself as a public pauper it creates an
Mr. HARRISON. I am afraid that if I should agree to it embarrassment before It allows anyone to receive any -Lene­
the Senate would overrule me about it, fits, and then leaves it hazardous as to there being any
The VICE PRESIDENT. The Senator offers an amend- benefits, because at the most only 1 out of 10 can be accom­
ment? modated under the bill.
Mr. GORE. Yes; I offer the amendment. However, when there has been any reasonable ground for
The VICE PRESIDENT. 'The Senator has put It In his -expecting good to be done I have recorded my vote for these
pocket, the Chair understands, measures of all krinds. There Is some reasonable grouiid here
9650 CONGRESSIONAL RECORD--SENATE JUNE 19
to expect that good may come from the bill However. Mr. The result was announced-yeas 77'1 nays 8, as follows:
President I wlsh tosay that Ihave notadoubt about theYKBT
bill being unconstitutional. ~asCns Y eyeS Po7
I am willing, however, to Waive my own opinion on the Aahurst Coolidge King RadclIffe
question of constitutionality in favor of the opinion of those Bachmasn Copeland La,Follette Reynoida.
who claim to be better students of the Constitution. I have ]Bailey
Bankhead Coatigan
Davis Lewis Robinson
Lonergan Russell
seen at least nine " brain trusters " on the floor of the Senate Barbour Dickinson long Schaill
since the bill has been under consideration. all of whom Darkley Dieterich McCarran Schwellenbach
B~oDonahey McGill Sheppard
evidently claim the bill to be constitutional. Since it is the Black Dufty McKellar Shipatead
order of the day to accept the opinion of the "1brain trus- Bone Pletcher McNar7 Steiwer
ters" on aill constitutional questions which may arise, I am Borab
Brown
Frazier
George
Maloney
Minton'
Thomas. Okla.
Tramnmeii
not so sure that before the case would reach the Supreme Buikiey Gerry Murphy Truman
Court some of the judges of the Supreme Court might die Bulow Gibson Murray Vandenberg
Burke
and some of these "1brain trusters," might be placed on the nlymes Guffey
Harrison
Neely
Norris
~ Van Nuys
wagner
Supreme Court bench in time to consider the bill when it Capper Hatch OWslioney Walsh
shall reach that Court for consideration. That being so, Caraway Hayden Overton Wheeler
Chavez
there is that chance of the bill being declared constitutional. Clark Johnson Pittman White
I shall give them the benefit of any hazard of a doubt which KAY"­
might accidentally flow into consideration of the bill. Austin Hastings Moore. Townsend
I would have It known by my record that there is no HwMetcalf
desire on my Part to obstruct anything having a pretense NOT VOTDIG-n2
of being for the public good, though In this case, as in others Byrd (Ila"s McAdoo Smith
similar to it. I shall be very much surprised if a single mem- came
C~ouzens
Gore
Logan
Norbeck
Nye
Thomas. 'tab.
Tydings
her of the Court, if it shall remain constituted as It is today, So the bill was passed.
should hesitate for an instant to declare the bill unconsti- The title was amended so as to read: "An act to provide
tutional. I should be even more surprised if a single bit Of f or the general welfare by establishing a system of Flederal
good should come out of the bill, but I give the sponsors of old-age benefits, and by enabling the several States to make
the bill all the benefit of the doubt. more adequate provision for aged persons, blind persons,
The VICE PRESIDENT. The question is on agreeing to dependent and crippled children, maternal and child welfare
the amendment of the Senator from Oklahoma. public health, and the administration of their unemploy­
Mlr. GORE. Mr. President, I should like to have a yea- ment-compensation laws; to establish a Social Security
and-nay vote. Other Senators May' desire it Or May not Board; to raise revenue;, and for other purposes."
desire it. I ask for the yeas and nays. Mr. HARRISON. I move that the Senate insist upon its
The yeas and nays were not ordered, amendments, ask for a conference thereon with the House
The amendment was rejected. of Representatives, and that the Chair appoint the conferees
The VICE PRESIDENT. The question Is on the engross- on the part of the Senate.
ment and third reading of the bill. The motion was agreed to.
The bill was ordered to be engrossed for a third redig The VICE PRESIDENT. The Chair will appoint the Sen­
a-id read the third time, ate conferees later,
The VICE PRESIDENT. The question Is, Sball the bill The VICE PRESIDENT subsequently appointed Mr. HAa­
Mr.sLRFLErE e shveteya n as isoN, Mr. KING, Mr. GEORGE, Mr. KEYics, and Mr. LA PFOuanrr
Mr.
=. A FOLL
Lt u hae te yes ad nys. conferees on the part of the Senate.
The yeas and nays were ordered, and the Chief Clerk pro­
ceeded to call the roll.
Mr. BYRD (when his name was called). On this ques­
tion I have a pair with the Senator from California [Mr.
McAnool, who is unavoidably detained. If he were present,
he would vote " yea." -If I were permitted to vote, I should
vote `"nay."
Mr. LA FIOLLET`TE (when Mr. NYK's name was called). I
was requested to announce that the junior Senator from
North Dakota [Mr. NYE] is paired with the senior Senator
from Virginia [Mr. GLASS], who is necessarily detained.
The Junior Senator from North Dakota tMr. NYx] is absent
on account of Illness. If present, he would vote "yea," I
am informed that the Senator from Virginia (Mr. GLAqsS),
with whom he is paired, would vote "a.
The roll call was concluded.
Mr. DAVIS (after having voted In the afi~rmative). I
have a general pair with the Junior Senator from Kentucky
[Mr. LOGAN], Who is unavoidably detained. I am informed
that if Present, he would vote as I have voted. Therefore I
allow my vote to stand.
Mr. BUJLKLEY. I repeat my announcement of my gen­
eral Pair with the senior Senator from Wyoming (Mr.
CAszyl. I am advised that if he were Present, he would
vote as I intend to vote. f: am therefore free to vote. I
vote "yea."
Their names being called, Mr. Ty~nros and Mr. GoRx an­
swered sopresent."
Mr. LEWIS. I wish to announce that the senator from
South Carolina [Mr. 8 I~is necessarily detained in an
Important committee meeting.
Thbe Senator from UTAH [Mr. TEOMASI Is necessarily de­
tained on important public businss, If present, he would
vote "yea
74TH CONGRE SS
1ST SL~ssxoN H. R 7 6 "

IN THE HOUSE OF REPRESENTATIVES

JUNE 20,5 1935
Ordered to be printed with the amendments of the Senate numbered

AN ACT
"'To provide for the general welfare by establishing a system of
Federal old-age benefits, and by enabling the several States
to make more adequate provision for aged persons, dependent
and crippled children, maternal and child welfare, public
health, and the administration of their unemployment com­
pensation laws; to establish a Social Security Board; to raise
revenue; and for other purposes.
IBe it enacted by the Senate and Houme of Represeiita­
'2 tives of the United States of America in Congress assembled,
3 TITLE I-GRANTS TO STATES FOR OLD-AGE
4 ASSISTANCE
5 APPROPRIATION

6 SECTION 1. For the purpose of enabling each State

7 to furnish financial (1)assisaee frssuT-n, aa kfa as pi~aet;

 2
1 ea~bk tifid the eefidiiefs in siieh Stete a *easefiable su~bsist­
2 eiie email ihdefe -dhe oae ~ivdt

3 wiethi suaeh eii~sistefiee assistance, as far as practicable

4 under the conditions in such State, to aged needy
5 individuals, there is hereby authorized to be appropri­
6 ated for the fiscal year ending June 30, 1936, the sum
7 of $49,750,000, and there is hereby authorized to be appro­
8 priated for each fiscal year thereafter a sum sufficient to
9 carry out the purposes of this title. The sums made avail­
10 able under this section shall be used for making payments to
I1I States which have submitted, and had approved by the Social
12 Security Board established by Title VII (hereinafter
1: referred to as the "Board"), State plans for old-age
14 assistance.
15 STATE OLD-AGE ASSISTANCE PLANS

16 SEC. 2. (a) A State plan for old-age assistance must

17 (1) provide that it shall be in effect in all political subdivi­
18 sions of the State, and, if administered by them, be manda­
19 tory upon them; (2) provide for financial participation
20 by the State; (3) either provide for the establishment or
21 designation of a single State agency to administer the plan,
22 or provide for the establishment or designation of a siligle
23 State agency to supervise the administration of the plan;
24 (4) provide for granting to any individual, whose claim for
25 old-age assistance is denied, an opportunity for a fair hear­
 3
1 ing before such State agency; (5) provide such methods

2 of administration (other than those relating to selection,

3 tenure of office, and compensation of personnel) as are
4 found by the Board to be necessary for the efficient oper­
5 ation of the plan; (6) provide that the State agency will

6 make such reports, in such form and containing such informa­

7 tion, as the Board may from time to time require, and

8 comply with such provisions as the Board may from time

9 to time find necessary to assure the correctness and verifica­
10 tion of such reports; and (7) provide that, if the State or
11 any of its political subdivisions collects from the estate of
12 an,.y recipient of old-age assistance any amount with respect
13 to old-age assistance furnished him under the plan, (2)efle­

14 hagf of the net amount so collected (3)a part thereof in

15 proportion to the part of the old-age assistance which repre­

16 sents the payments made by the 'United States shall be

17 promptly paid to the U~nited States. Any payment so

18 made shall be deposited in the Treasury to the credit of

19 the appropriation for the purposes of this title.

20 (b) The Board shall approve any plan which fulfills

21 the conditions specified in subsection (a) , except that it shall
22 not approve any plan which imposes, as a condition of
23 eligibility for old-age assistanee under the plan­

24 (1) An age requirement of more than sixty-five

25 years, except that the plan may impose, effective until
 4
1 January 1, 1940, an age requirement of as much as
2 seventy years; or
3 (2) Any residence requirement which excludes
4 anv resident of the State who has resided therein five
years during the nine years immediately preceding the
6 application for old-age assistance and has resided therein
4 continuously for one year immediately preceding the
S application; or
9 (3) Any citizenship requirement which excludes
10 any citizen of the United States.
11 PAYMENT TO STATES

12 Smc. 3. (a) From the sums appropriated therefor, the

13 Secretary of the Treasury shall pay to each State which
14 has an approved plan for old-age assistance, for each quarter,
15 beginning with the quarter commencing July 1, 1935, (1)
16 an amount, which shall be used exclusively as old-age as­
17 sistance, equal to one-half of the total of the sums expended
18 during such quarter as old-age assistance under the State
19 plan with respect to each individual who at the time of such
20 expenditure is sixty-five years of age or older and is not
21 an inmate of a public institution, not counting so much
22 of such expenditure with respect to any individual for any
23 month as exceeds $.30, and (2) 5 per centum. of such
24 amount, which shall be used for paying the costs of ad­
25 ministering the State plan or for old-age assistance, or
 5
1 both, and for no other purpose (4): Provided, That in
2 order to assist the aged of the several States who have
3 no State system of old-age pensions until an opportunity
4 is afforded the several States to provide for a State plan,
5 'including financial participationby the States, and notwith­
6 standing any other provision of this title, the Secretary of

7 the Treasury shall pay to each State for each quarter until
8 not later than July 1, 1937, to be used exclusively as old-age

9 assistance, in lieu of the amount payable under the provi­

10 sions of clause (1) of this subsection, an amount sufficient
11 to afford, old-age assistance to each needy individual within
12 the State who at the time of such expenditure is sixty-five
13 years of age or older, and who is declared by such agency

14 as may be designated by the Social Security Board to be

15 entitled to receive the same: Provided further, That no

16 person who is an inmate of a public institution shall receive

17 -such old-age assistance, nor shall any individual receive an
18 amount in excess of $15 per month.

19 (b The method of computing and paying such amounts

20 shall be as follows:
21 (1) The Board shall, prior to the beginning of
22 each quarter, estimate the amount to be paid to the
23 State for such quarter under the provisions of clause
24 (1) of subsection (a), such estimate to be based
25 on (A) a report fled by the State containing its
 6
1 estimate of the total sum to be expended in such
2 quarter in accordance with the provisions of such
3 clause, and stating the amount appropriated or made
4 available by the State and its political subdivisions
5 for such expenditures in such quarter, and if such
6 amount is less than one-half of the total sum of such
7 estimated expenditures, the source or sources from which
8 the difference is expected to be derived, (B) records
9 showing the number of aged individuals in the State,
10 and (C) such other investigation as the Board may find
11 necessary.
12 (2) The Board shall then certify to the Secretary
13 of the Treasury the amount so estimated by the Board,
14 reduced or increased, as the case may be, by any sum
15 by which it finds that its estimate for any prior quarter
16 was greater or less than the amount which should have
17 been paid to the State under clause (1) of sub­

18 section (a) for such quarter, except to the extent that

19 such sum has been applied to make the amount certified
20 for any prior quarter greater or less than the amount
21 estimated by the Board for such prior quarter.
22 (3) The Secretary of the Treasury shall there­
23 upon, through the Division of Disbursement of th(
24 Treasury Department and prior to audit or settlement
 7

1 by the General Accounting Office, pay to the State,

2 at the time or times fixed by the Board, the amount
3 so certified, increased by 5 per centum.
4 OPERATION OF STATE PLANS

5 SiMc 4. In the case of any State plan for old-age

6 assistance which has been approved by the Board, if the
7 Board, after (5)reasonable notice and opportunity for hear­
8 ing to the State. agency administering or supervising the
9 administration of such plan, finds­
10 (1) that the plan has been so changed as to im­
11 pose any age, residence, or citizenship requirement
12 prohibited by section 2 (b) , or that in the administra­
13 tion of the plan any such prohibited requirement is
14 imposed, with the knowledge of such State agency, jp

15 a substantial number of cases; or

16 (2) that in the administration of the plan there
17 is a failure to comply substantially with any provision
18 required by section 2 (a) to be included in the plan;
19 the Board shall notify such State agency that further pay­
20 ments will not be made to the State until the Board is satis­
21 fled that such prohibited requirement is no longer so imposed,
22 and that there is no longer any such failure to comply.
23 Until it is so satisfied it shall make no further certification
24 to the Secretary of the Treasury with respect to such State.
 8
I ADM[INISTRATION

2 SEC. 5. There is hereby authorized to be appropri­

3 ated for the fiscal year ending June 30, 1936, the sum
4 of $250,000, for all necessary expenses of the Board in
5 administering the provisions of this title.
6 DEFINITION

7 Siwc. 6. When used in this title the term "old-age

8 assistance " means money payments to aged individuals.
9 TITLE II-FEDERAL OLD-AGE BENEFITS
10 OLD~-AGE RESERVE ACCOUNT

11 SECTION 201. (a) There is hereby created an account

12 in the Treasury of the United States to be known as the
13 "Old-Age Reserve Account " hereinafter in this title called
14 the "Account ".There is hereby authorized to be appro­
15 priated to the Account for each fiscal year, beginning with
16 the fiscal year ending June 30, 1937, an amount sufficient as
17 an annual premium to provide for the payments required
18 under this title, such amount to be determined on a reserve
19 basis in accordance with accepted actuarial principles, and
20 based upon such tables of mortality as the (6)8eefet&iry of
21 the Tr-easaty Social Security Board shall from time to time
22 adopt, and upon an interest rate of 3 per centum per annum.
23 compounded annually. The (7)8ee-Fet&Fy of the Tr-easfffy
24 Social Security Board shall submit annually to the Bureau
 9
1 of the Budget an estimate of the appropriations to be made
2 to the Account.
3 (b) It shall be the duty of the Secretary of the Treas­
4 ury to invest such portion of the amounts credited to the
5 Account as is not, in his judgment, required to meet current
6 withdrawals. Such investment may be made only in
7 interest-bearing obligations of the United States or in obliga­
8 tions guaranteed as to both principal and interest by the
9 United States. For such purpose such obligations may be
10 acquired (1) on original issue at par, or (2) by purchase
11 of outstanding obligations at the market price. The pur-.
12 poses for which obligations of the United States may be
13 issued under the Second Liberty Bond Act, as amended, are
14 hereby extended to authorize the issuance at par of special
15 obligations exclusively to the Account. Such special obliga­
16 tions shall bear interest at the rate of 3 per centumn per
17 annum. Obligations other than such special obligations
18 may be acquired for the Account only on such terms as to
19 provide an investment yield of not less than 3 per centunm
20 Per annum.
21 (c) Any obligations acquired by the Account (except
22 special obligations issued exclusively to the Account) may be
23 sold at the market price, and such special obligations may be
24 redeemed at par plus accrued interest.
 10
1 (d) The interest on, and the proceeds from the sale or
2 redemption of, any obligations held in the Account shall be
3 credited to and form a part of the Account.
4 (e) All amounts credited to the Account shall be avail­
5 able for making payments required under this title.
6 (f) The (8)Seereta~y of the TreasIul-y Social Security
7 Board shall include in his annual report the actuarial status
8 of the Account.
9 OLD-AGE BENEFIT PAYMENTS

10 SEc. 202. (a) Every qualified individual (as defined in

11 section 210) shall be entitled to receive, with respect to the
12 period beginning on the date he attains the age of sixty-five,
13 or on January 1, 1942, whichever is the la-ter, and ending
14 on the date of his death, an old-age benefit (payable as
15 nearly as practicable in equal monthly installments) as

16 follows:
17 (1) If the total wages (as defined in section
18 210) determined by the Board to have been paid to
19 him, with respect to employment (as defined in section
20 210) after December 31, 1936, and before he attained
21 the age of sixty-five, were not more than $3,000, the
22 old-age benefit shall be at a monthly rate of one-hailf
23 of 1 per centum of such total wages;
24 (2) If such total wages were more than $3,000,
25 the old-age benefit shall be at a monthly rate equal to
26 the sum of the following:
 11
1 (A) One-half of 1 per centum of $3,000;

2 plus
3 (B) One-twelfth of 1 per centum of the

4 amount by which such total wages exceeded

5 $3,000 and did not exceed $45,000; plus

6 (C) One-twenty-fourth of 1 per centulm of
7 the amount by which such total wages exceeded

8 $45,000.
9 (b) In no case shall the monthly rate computed under
10 subsection (a) exceed $85.
11 (c) If the Board finds at any time that more or less
12 than the correct amount has theretofore been paid to any
13 individual under this section, then, under regulations made
14 by the Board, proper adjustments shall be made in con­
15 nection with subsequent payments under this section to the

16 same individual.
17 (9)(d) Whenever the Board finds that any qualified

18 individual has received wages with respect to regular employ­

19 ment after he attained the age of sixty-five, the old-age benefit

20 payable to such individual shall be reduced, for each calendar

21 month in any part of which such regular employment oc­

22 curred, by an amount equal to one month's benefit. Such

23 reduction shall be made, under regulations prescribed by

24 the Board, by deductions from one or more payments of

25 old-age benefit to such individual.
 12
1 PAYMENTS UPON DEATH

2 SEm. 203. (a) If any individual dies before attaining

3 the age of sixty-five, there shall be paid to his estate an
4 amount equal to 31 per centum of the total wages deter­
5 mined by the Board to have been paid to him, with respect
6 to employment after December 31, 1936.
7 (b) If the Board finds that the correct amount of the
8 old-age benefit payable to a qualified individual during his
9 life under section 202 was less than 31 per centumi of the
10 total wages by which such old-age benefit was measurable,
11 then there shall be paid to his estate a sum equal to the
12 amount, if any, by which such 3+ per centum exceeds the
13 amount (whether more or less than the correct amount)
14 paid to him during his life as old-age benefit.
15 (c) If the Board finds that the total amount paid
16 to a qualified individual under an old-age benefit during
17 his life was less than the correct amount to which he was
18 entitled under section 202, and that the correct amount of
19 such old-age benaefit was 31 per centum. or more of the
20 total wages by which such old-age benefit was measurable,
21 then there shall be paid to his estate a sum equal to the
22 amount, if any, by which the correct amount of the old-age
23 benefit exceeds the amount which was so paid to him
24 during his life.
 13
1 PAYMENTS TO AGED INDTDVIDUjALS NOT QUALIFIED FOR

2 B3ENEFITS

3 SEC. 204. (a) There shall be paid in a lump sum to any

4 individual who, upon attaining the age of sixty-five, is not a
5qualified individual, an amount equal to 31i per centum of the
6 total wages determined by the Board to have been paid to
7 him, with respect to employment after December 31, 1936,
8 and before he attained the age of sixty-five.
9 (b) After any individual becomes entitled to any pay­
10 ment under subsection (a), no other payment shall be made
11 under this title in any manner measured by wages paid
12 to him, except that any part of any payment under subsection
13 (a) which is not paid to him before his death shall be paid to
14 his estate.
15 A-MOUNTS OF $500 0OR LESS PAYABLE TO ESTATE'S

16 SEC. 205. If any amount payable to an estate under

17 section 203 or 204 is $500 or less, such amount may, under

18 regulations prescribed by the Board, be paid to the persons
19 found by the Board to be entitled thereto under the law of
20 the State in which the deceased was domiciled, without the
21 necessity of compliance with the requirements of law with
22 respect to the administration of such estate.
23 OVERPAYMENTS DURING LIFE

24 SEC. 206. If the Board finds that the total amount paid

25 to a qualified individual under an old-age benefit during his

 14
1 life was more than the correct amount to which he was
2 entitled under section 202, and was 3-2 per centum or more
3 of the total wages by which such old-age benefit was meas­
4 urable, then upon his death there shall be repaid to the
5 United States by his estate the amount, if any, by which
6 such total amount paid to him during his life exceeds which­
7ever of the following is the greater: (1) Such 31 per
8 centum, or (2) the correct amount to which he was entitled
9 under section 202.
10 METHOD OF MAKING PAYMENTS

11 SE~C. 207. The Board shall from time to time certify

12 to the Secretary of the Treasury the name and address of
13 each person entitled to receive a payment under this title,
14 the amount of such payment, and the time at which it
15 should be made, and the Secretary of the Treasury through
16 the Division of Disbursement of the Treasury Depar~tment,
17 and prior to audit or settlement by the General Account­
18 ing Office, shall make payment in accordance with the
19 certification by the Board.
20 ASSIGNMENT

21 SEC. 208. The right of any person to any future pay­

22 ment under this title shall not be transferable or assignable,

23 at law or in equity, and none of the moneys paid or payable
24 or rights existing under this title shall be subject to execu­
25 tion, levy, attachment, garnishment, or other legal process,
26 or to the operation of any bankruptcy or insolvency law.
 15
I PENALTIES

2 SEC. 209. Whoever in any application for any pay­

3 ment under this title makes any false statement as to any
4 material fact, knowing such statement to be false, shall
5 be fined not more than $1,000 or imprisoned for not more
6 than one year, or both.
7 DEFINITIONS

8 SEC. 210. When used in this title­

9 (a) The term " wages " means all remuneration for
10 employment, including the cash value of all remuneration
II paid in any medium other than cash; except that such term
12 shall not include that part of the remuneration which, after
13 remuneration equal to $3,000 has been paid to an indi­
14 vidual by an employer with respect to employment during
15 any calendar year, is paid to such individual by such
16 employer with respect to employment during such calendar
17 year.
18 (b) The term " employment " means any service,
19 of whatever nature, performed within the -United States
20 (10), or as an officer or member of the crew of a vessel
21 documented under the laws of the United States, by an em­

22 ployee for his employer, except­

23 (1) Agricultural labor;
24 (2) Domestic service in a private home;
25 (3) Casual labor not in the course of the cm­
26 ployer's trade or business;
 16
1 (1)-4)-Sefviee peffeffie'd as an offeef of ffeemeer
ofte efeeof a vessel deetmntd the 1aws of
emd
3 the United States of of afny ifreig eetmkcy;
4 (12)-(-.) (4) Service performed in the employ of the
5 United States Government or of an instnu-mentality of
o the United States;
7 (13)-(-) (5) Service performed in the employ of a
8 ~State, a political subdivision thereof, or an instrumen­
9 tality of one or more States or political subdivisions;
10 (14)-(7-) (6) Service performed in the employ of a cor­
11 poration, community chest, fund, or foundation, organ­
12 ized and operated exclusively for religious, charitable,
13 scientific, literary, (1 5)eiz edueeAten-9 educational or
14 hospital purposes, (16)or for the prevention of cruelty
15 to children or animals, no part of the net earnings of
16 which inures to the benefit of any private shareholder
17 or individual.
18 (17)(7) Service performed in the employ of an emplbyer
19 who has in operation a plan providing annuities to em­

20 ployees which is certified by the Board as having been

21 approved by it under section 702, if the employee performing

22 such service has elected to come under such plan; except

23 that if any such employee withdraws from the plan before
24 he attains the age of sixty-five, or if the Board withdraws
 17
I its approval of the plan, the service performed while the

2 employee was under such plan as approved shall be con­

3 strued to be employment as defined in this subsection.

4 (c) The Term " qualified individual " means any indi­
5 vidual with respect to whom it appears to the satisfaction of
6 the Board that­
7 (1) He is at least sixty-five years of age; and
8 (2) The total amount of wages paid to him, with
9 respect to employment after December 31, 1936, and
10 before he attained the age of sixty~-five, was not less
I1I than $2,000; and
12 (3) Wages were paid to him, with respect to
13 employment on some five days after December 31,
14 1936, and before he attained the age of sixty-five,
15 each day being in a different calendar year.
16 TITLE III-GRANTS TO STATES FOR UNEMPLOY­
17 MENT COMPENSATION ADMINISTRATION
18 APPROPRIATION

191 SECTION 301. For the purpose of assisting the States

20 in the administration of their unemployment compensation
21 laws, there is hereby authorized to be appropriated, for the
22 fiscal year ending June 30, 1936, the sum of $4,000,000,
23 and for each fiscal year thereafter the sum of $49,000,000,
24 to be used as hereinafter provided.
H. R. 7260-2
 18
I PAYMENTS TO STATES

2 SEc. 302. (a) The Board shall from time to time cer­
3 tify to the Secretary of the Treasury for payment to each
4 State which has an unemployment compensation law ap­
5 proved by the Board under Title IX, such amounts as the
6 Board determines to be necessary for the proper adminis­
7 tration of such law during the fiscal year in which such
8 payment is to be niade. The Board's determination shall
9 be based on (1) the population of the State; (2) an esti­
10 mate of the number of persons covered by the State law and
11 of the cost of proper administration of such law; and (3)
12 such other factors as the Board finds relevant. The Board
13 shall not certify for payment under this section in any fiscal
14 year a total amount in excess of the amount appropriated
15 therefor for such fiscal year.
16 (b) Out of the sums appropriated therefor, the Secre­
17 tary of the Treasury shall, upon receiving a certification
18 under subsection (a), pay, through the Division of IDis­
19 bursement of the Treasury Department and prior to audit or
20 settlement by the General Accounting Office, to the State
21 agency charged with the administration of such law the
22 amount so certified.
23 PROVISIONS OF STATE LAWS

24 SEc. 303. (a) The Board shall make no certification

25 for payment to any State unless it finds that the law of such
 19
1 State, approved by the Board under Title IX, includes
2 provisions for­

3 (1) Such methods of administration (other than

4 those relating- to selection, tenure of office, and corn­
5 pensation of personnel) as are found by the Board to

6 be reasonably calculated to insure full payment of

7 unemployment compensation when due; and
8 (2) Payment of unemployment compensation

9 (18)selely through public employment offices in the

10 State (19), to the extent that such offices exist and are
11 designated by the State for the purpose; and
12 (3) Opportunity for a fair hearing, before an

13 impartial tribunal, for all individuals whose claims for

14 ~ unemployment compensation are denied; and

15 (4) The payment of all money received in the

16 unemployment fund of such State, immediately upon

17 such receipt, to the Secretary of the Treasury to the

18 credit of the Unemploymant Trust Fund establislicd by

19 section 904; and

20 (5) Expenditure of all money requisitioned by

2f the State agency from the Unemployment Trust Fund,

22 in the payment of unemployment compensation, exclu­
23 sive of expenses of administration; and

24 (6) The making of such reports, in such form

25 and containing such information, as the Board may
 20
1 from time to time require, and compliance with such
2 provisions as the Board may from time to time find
3 necessary to assure the correctness and verification of
4 such reports; and
5 (7) Making available upon request to any agency
.6 of the 'United States charged with the administration
7 of public works or assistance through public employ­
8 ment, the name, address, ordinary occupation and em­
9 ployment status of each recipient of unemployment corn­
10 pensation, and a statement of such recipient's rights to
1I further compensation under such law.
12 (b) Whenever the Board, after (20)reasonable notice
13 and opportunity for hearing to the State agency charged with
14 the administration of the State law, finds that in the admin­
15 istration of the law there is­
16 (1) a denial, in a substantial number of cases, of
17 unemployment compensation to individuals, entitled
18 thereto under such law; or
19 (2) a failure to comply substantially with any
20 provision specified in subsection (a) ;
21 the Board shall notify such State agency that further pay­
22 ments will not be made to the State until the Boa-id is sat­
23 isfied that there is no longer any such denial or failure to
24 comply. Until it is so satisfied it shall make no further
25 certification to the Secretary of the Treasury with respect
26 to such State.
 21
1 TITLE IV-GRANTS TO STATES FOR AID TO
2 DEPENDENT CHILDREN
3 APPROPRIATION

4 SECTION 401. For the purpose of enabling each State

5 to furnish financial (2 1)assistftnee asswrfng, as ffta p*&aetiea

6 bWe andeif 4e eeiaditiefis in sa*eh State7 a r-easeelabe sjibsisteneee
7 eefnpatible with deeeney and heelth to dependeiat ebildren
8 witheat seek sabsiste~*ee assistance, as far as practicable
9 under the conditions in such State, to needy dependent chil­
10 dren, there is hereby authorized to be appropriated for the
I11 fiscal year ending June 30, 1936, the sum of $24,750,000,
12 and there is hereby authorized to be appropriated for each
13 fiscal year thereafter a sum sufficient to carry out the pur­
14 poses of this title. The sums made available under this
15 section shall be used for making payments to States which
16 have submitted, and had approved by the (22)Boea*4 Chie/
17 of the Children's Bureau, State plans for aid to dependent
18 children.
19 STATE PLANS FOR AID TO DEPENDE NT CHILDREN

20 SEC. 402. (a) A State plan for aid to dependent chil­

21 dren must (1) provide that it shall be in effect in all political
22 subdivisions of the State, and, if administered by them, be
23 mandatory upon them; (2) provide for financial partici­
24 pation by the State; (3) either IprovTide for the establish­
25 ment or designation of a single State agency to administer
 22
1 the plan, or provide for the establishment or designation of
2 a single State agency to supervise the administration of the
3 plan; (4) provide for granting to any individual, whose claim
4 with respect to aid to a dependent child is denied, an oppor­
5 tunity for a fair hearing before such State agency; (5) pro­
6 vide such methods of administration (other than- those relat­
7 ing to selection, tenure of office, and compensation of per­
8 sonnel) as are found by the (23)Beard Chief of the Chil­
9 dren's Bureau to be necessary for the efficient operation of
10 the plan; and (6) provide that the State agency will make
11 such reports, in such form and containing such information,
12 as the (24)Beff~4 Secretary of Labor may from time to
13 time require, and comply with such provisions as (25)the
14 Bear- he may from time to time find necessary to assure the
15 correctness and verification of such reports.
16 (b) The (26>Boafd Chief of the Children's Bureau
17 shall approve any plan which fulfiills the conditions specified
18 in subsection (a), except that (27)it he shall not approve
19 any plan which imposes as a condition of eligibility for aid to
20 dependent children, a residence requirement which denies
21 aid with respect to any child residing in the State (1)
22 who has resided in the State for one year immediately pre­
23 ceding the application for such aid, or (2) who was born
24 within the State within one year immediately preceding
 23
1 the application (28), if its mother has resided in the State for
2 one year immediately preceding the birth.
3 PAYMENT TO STATES

4 SEC. 403. (a) From the sums appropriated therefor;

5 the Secretary of the Treasury shall pay to each State which
6 has an approved plan for aid to dependent children, for each
7 quarter, beginning with the quarter commencing July 1,
8 1935, an amount, which shall be used exclusively for carry­
9 ing out the State plan, equal to one-third of the total of the
10 sums expended during such quarter under such plan, not
11 counting so much of such expenditure with respect to any
12 dependent child for any month as exceeds $18, or if there
18 is more than one dependent child in the same home, as
14 exceeds $18 for any month with respect to one such depend­
15 ent child and $12 for such month with respect to each of
16 the other dependent children.
17 (b) The method of computing and paying such
18 amounts shall be as follows:
19 (1)The (29>Bea"4 Secretary of Labor shall, prior
20 to the beginning of each quarter, estimate the amount
21 to be paid to the State for such quarter under the pro­
22 visions of subsection (a) , such estimate to be based on
'23 (A) a report ifiled by the State containing its estimate
24 of the total sum to be expended in such quarter in
 24
I accordance with the provisions of such subsection and
2 stating the amount appropriated or made available by
:3 the State and its political subdivisions for such expendi­
4 tures in such quarter, and if such amount is less than
5 two-thirds of the total sum of such estimated expendi­
6 tures, the source or sources from which the difference is
7 expected to be derived, (B) records showing the nuni­
8 ber of dependent children in the State, and (C) such
9 other investigation as the (30}Beod Secretary of
10 Labor may find necessary.
11 (2) The (31>Beaifd Secretary of Labor shall
12 then certify to the Secretary of the Treasury the amount
13 so estimated by the (32>Befwd Secretary of Labor,
14 reduced or increased, as the case may be, by any sum
15 by which (33)kI he finds that (34)4-s his estimate for
16 any prior quarter was greater or less than the amount
17 which should have been paid to the State for such
18 quarter, except to the extent that such sum has been
19 applied to make the amount certified for any prior
20 quarter greater or less than the amount estimated by
21 the (35)Beff4 Secretary of Labor for such prior
22 quarter.
23 (3) The Secretary of the Treasury shall there­
24 upon, through the Division of Disbursement of the
 25
1 Treasury Department and prior to audit or settlement
2 by the General Accounting Office, pay to the State,
3 at the time or times fixed by the (36)B3eafi Secretary
4 of Labor, the amount so certified.
5 OPERATION OF STATE PLANS

6 SEC. 404. In the case of any State plan for aid to

7 dependent children which has been approved by the
8 (37>B**ad Chief of the Children's Bureau, if the
9 (38>)Beaf~ Secretary of Ldbor, after (39)reasonable notice
10 and opportunity for hearing to the State agency adminis­
11 tering or supervising the administration of such plan, finds­
12 (1) that the plan has been so changed as to im­
13 pose any residence requirement prohibited by section
14 402 (b), or that in the administration of the plan any
15 such prohibited requirement is imposed, with the knowl­
16 edge of such State agency, in a substantial number of
17 cases; or
18 (2) that in the administration of the plan there is
19 a failure to comply substantially with any provision
20 required by section 402 (a) to be included in the plan;
21 the (40>Boftf Secretary of Labor shall notify such State
22 agency that further payments will not be made to the State
23 until (41)4K-, Beafd he is satisfied that such prohibited
24 requirement is no longer so imposed, and that there is no
 26

ilonger any such failure to comply. Until (42)it he is so

2 'satisfied (43)i4 he shall make no further certification to the
3 Secretary of the Treasury with respect to such State.
4 ADMINISTRATION

5 SEC. 405. There is hereby authorized to be appro­

6 priated for the fiscal year ending June 30, 1936, the sum of
7 $250,000 for all necessary expenses of the (44)Beet*d
8 Children's Bureau in administering the provisions of this
9 title.
10 DEFINITIONS

11 SEC. 406. When used in this title­

12 (a) The term " dependent child " means a child under
13 the age of sixteen (45)who has been deprived of parental
14 support or care by reason of the death, continued absence
15 from the home, or physical or mental incapacity of a parent,
16 and who is living with his father, mother, grandfather,
17 grandmother, brother, sister, stepfather, stepmother, step­
18 brother, stepsister, uncle, or aunt, in a (46)place of resi­
19 dence maintained by one or more of such relatives as his

20 or their own home;

21 (b) The termn " aid to dependent children " means
22 money payments with respect to a dependent child or
23 dependent children.
 27

1TITLE V-GRANTS TO STATES FOR MATERNAL

2 AND CHILD WELFARE
a PART 1-MATERNAL AND CHILD HEALTH SERVICES

4 APPROPRIATION

5 SECTION 501. For the purpose of enabling each State

6 to extend and improve, as far as practicable under the condi­

7 tions in such State, services for promoting the health of
8 mothers and children, especially in rural areas and in areas
9 suffering from severe economic distress, there is hereby
10 authorized to be appropriated for each fiscal year, beginning
11 with the fiscal year ending June 30, 1936, the sumi of

12 $3,800,000. The sums made available under this section

13 shall be used for making payments to States which have
14 submitted, and had approved by the Chief of the Childrein's
15 Bureau, State plans for such services.

16 ALLOTMENTS TO STATES

17 SEC. 502. (a) Out of the sums appropriated pursuant to

18 section 501 for ea-ch fiscal year the Secretary of Labor shall
19 allot to each State $20,000, and such part of $1,800,000

20 as he finds that the number of live births in such State

21 (47)beafs bore to the total number of live births in the
22 United States (48), in the latest calendar year for which
23 the Bureau of the Census has available statistics.
 28
1 (b) Out of the sums appropriated pursuant to section
2 501 for each fiscal year the Secretary of Labor shall allot
3 to the States $980,000 (in addition to the allotments made
4 under subsection (a) ), according to the financial need of
5 each State for assistance in carying out its State plan, as
6 determined by him after taking into consideration the num­
7 her of live births in such State.
8 (c) The amount of any allotment to a State under
9 subsection (a) for any fiscal year remaining unpaid to
10 such State at the end of such fiscal year shall be available
11 for payment to such State tinder section 504 until the end
12 of the second succeeding fiscal year. No payment to a
13 State under section 504 shall be made out of its allotment
14 for any fiscal year until its allotment for the preceding
15 fiscal year has been exhausted or has ceased to be available.
16 APPRiOVAL OF STATE PLANS

17 SEc. 503. (a) A State plan for maternal and child-

18 health services must (1) provide for financial participa­
19 tion by the State; (2) provide for the administration of the
20 plan (49)by the State health agency or the supervision of the
21 administration of the plan by the State health agency;
22 (3) provide such methods of administration (other than
23 those relating to selection, tenure of office, and compensation
24 of personnel) as are (50)fetia4 by the, Qkid f the Gbidirenl
 29
1 Bthreati to he necessary for the efficient operation of the
2 plan; (4) provide that the State health agency will make
3 such reports, in such form and containing such information,
4 as the Secretary of Labor may from time to time require,
5 and comply with such provisions as he may from time to
6 time find necessary to assure the correctness and verification
7 of such reports; (5) provide for the extension and improve­
8 ment of local maternal and child-health services administered
9 by local child-health units; (6) provide for cooperation with
10 medical, nursing, and welfare groups and organizations;
11 and (7) provide for the development of demonstration serv­
12 ices in needy areas and among groups in special need.
13 (b) The Chief of the Children's Bureau shall approve
14 any plan which fulfills the conditions specified in subsection
15 (a) and shall thereupon notify the Secretary of Labor and
16 the State health agency of his approval.
17 PAYMENT TO STATES

18 SEC. 504. (a) From the sums appropriated therefor

19 and the allotments available under section 502 (a), the Secre­
20 tary of the Treasury shall pay to each State which has an
21 approved plan for maternal and child-health services, for
22 each quarter, beginning (51)with the quarter commencing
23 July 1, 1935, an amount, which shall be used exclusively for
24 carrying out the State plan, equal to one-half of the total sum
25 expended during such quarter for carrying out such plan.
 30
1 (h) The method of computing and paying such
2 amounts shall be as follows:
3 (1) The Secretary of Labor shall, prior to the
4 beginning of each quarter, estimate the amount to be
5 paid to the State for such quarter under the provisions
6 of subsection (a) , such estimate to be based on (A)
7 a report filed by the State containing its estimate of
8 the total sum to be expended in such quarter in ac­
9 cordance with the provisions of such subsection and stat­
10 ing the amount appropriated or made available
11 by the State (52)and its political subdivisions for such
12 expenditures in such quarter, and if such amount is less
13 than one-half of the total sum of such estimated expendi­
14 tures, the source or sources from which the difference
15 is expected to be derived, and (B) such investigation
16 as he. may find necessary.
17 (2) The Secretary of Labor shall then certify the
18 amount so estimated by him to the Secretary of the
19 Treasury, reduced or increased, as the case may be,
20 by any sum by which the Secretary of Labor finds
21 that his estimate for any prior quarter was greater
22 or less than the amount which should have been paid
23 to the State for such quarter, except to the extent
24 that such sum has been applied to make the amount
 31

1 certified for any prior quarter greater or less than the

2 amount estimated by the Secretary of Labor for such
3 prior quarter.
4 (3) The Secretary of the Treasury shall there­
5 upon, through the Division of Disbursement of the

6 Treasury Department and prior to audit or settlement

7 by the General Accounting Office, pay to the State, at

8 tbe time or times fixed by the Secretary of Labor, the

9 amount so certified.

10 (c) The Secretary of Labor shall from time to time

11 certify to the Secretary of the Treasury the amounts to be

12 paid to the States from the allotments available under sec­

13 tion 502 (b) , and the Secretary of the Treasury shall,

14 through the Division of Disbursement of the Treasury De­

15 partment and prior to audit or settlement by the General
16 Accounting Office, make payments of such amounts from

17 such allotments at the time or times specified by thc

18 Secretary of Labor.

19 OPERATION OF STATE PLANS

20 SEC. 505. In the case of any State plan for maternal

21 and child-health services which has been approved by the

22 Chief of the Children's Bureau, if the Secretary of Labor,
23 after (53)reasonable notice and opportunity for hearing to the
24 State agency administering or supervising the administration
 32
I of sucli plan, finds that in the administration of the plan
2 there is a failure to comply substantially with any provision
39 required by section 503 to be included in the plan, he shall
4 notify such State agency that further payments will not~be
5made to the State until he is satisfied that there is no longer
6 any such failure to comply. Until he is so satisfied he shall
7 make no further certification to the Secretary of the
8 Treasury with respect to such State.
9PAnT 2-SERVICEs FOR CRIPPLED CHEILDREN
10 APPROPRIATION

I1I SEc. 511. For the purpose of enabling each State to

12 extend and improve (especially in rural areas and in areas
13 suffering from severe economic distress), as far as prac-.
14 ticable under the conditions in such State, services for locating
15 crippled children, and for providing medical, surgical, cor­
16 rective, and other services and care, and facilities for
17 diagnosis, hospitalization, and aftercare, for children who axe
18 crippled or who axe suffering from conditions which lead
19 to crippling, there is hereby authorized to be appropriated
20 for each fiscal year, beginning with the fiscal year ending
21 June 30, 1936, the sum of $2,850,000. The sums made
22 available under this section shall be used for making pay­
23 ments to States which have submitted, and had approved
24 by the Chief of the Children's Bureau, State plans for such
25 services.
 33
1 ALLOTMENTS TO STATES

2 SEc. 512. (a) Out of the sums appropriated pursuant

3 to section 511 for each fiscal year the Secretary of Labor
4 shall allot to each State $20,000, and the remainder to the
5 States according to the need of each State as determined
6 by him after talking into consideration the number of
7 crippled children in such State in need of the services
8 referred to in section 511 and the cost of furnishing such
9 services to them.
10 (b) The amount of any allotment to a State under
11 subsection (a) for any fiscal year remaining unpaid to
12 such State at the end of such fiscal year shall be available
13 for payment to such State under section 514 until the end
14 of the second succeeding fiscal year. No payment to a
15 State under section 514 shali be made out of its allotment
16 for any fiscal year until its allotment for the preceding fiscal
17 year has been exhausted or has ceased to be available.
18 APPROVAL OF STATE PLANS

19 SEC. 513. (a) A State plan for services for crippled

20 children must (1) provide for financial participation by the
21 State; (2) provide for the administration of the plan (54)by
22 a State agency or the supervision of the administration of the
23 plan by a State agency; (3) provide such methods of admnin­
24 istration (other than those relating to selection, tenure of
25 office, and compensation of personnel) as are (55)fefimd bNv
1H. Ri. 7260-3
 34
1 the chie of the Ch~d-ii'es Biiifee to be necessary for the
2 efficient operation of the plan; (4) provide that the State
3 agency will make such reports, in such form and containing
4 such information, as the Secretary of Labor may from time
5 to time require, and comply with such provisions as, he may
6 from time to time find necessary to assure the correctness and
7 verification of such reports; (5) provide for carrying out the
8 purposes specified in section 511; and (6) provide for
9 cooperation with medical, health, nursing, and welfare
10 groups and organizations and with any agency in such State
11 charged with administering State laws providing for voca­
12 tional rehabilitation of physically handicapped children.
13 (b) The Chief of the Children's Bureau shall approve
14 any plan which fulfills the conditions specified in subsection
15 (a) and shall thereupon notify the Secretary of Labor and
16 the State agency of his approval.
17 PAYMENT TO STATES

18 SEC. 514. (a) From the sums appropriated therefor

19 and the allotments available under section 512, the Secre­
20 tary of the Treasury shall pay to each State which has an
21 approved plan for services for crippled children, for each
22 quarter, beginning (56)wvith the quartercommencing July 1,
23 1935, an amount, which shall be used exclusively for carry­
24 ing out the State plan, equal to one-half of the total sum
25 expended during such quarter for carrying out such plan.
 35
1 (b) The method of computing and paying such
2 amounts shall be as follows:
3 (1) The Secretary of Labor shall, prior to the
4 beginning of each quarter, estimate the amount to be
5 paid to the State for such quarter under the provisions
6 of subsection (a), such estimate to be based on (A)
7 a report filed by the State containing its estimate of the
8 total sum to be expended in such quarter in accordance
9 with the provisions of such subsection and stating the
10 amount appropriated or made available by the State
11 (57)and its political subdivisions for such expenditures

12 in such quarter, and if such amount is less than one-half

1s of the total sum of such estimated expenditures, the
14 source or sources from which the difference is expected
15 to be derived, and (B) such investigation as he may
16 find necessary.
17 (2) The Secretary of Labor shall then certify the
18 amount so estimated by him to the Secretary of the
19 Treasury, reduced or increased, as the case may be, by
20 any sum by which the Secretary of Labor finds that
21 his estimate for any prior quarter was greater or less
22 than the amount which should have been paid to the
23 State for such quarter, except to the extent that such
24 sum has been applied to make the amount certified
25 for any prior quarter greater or less than the amount
 36
1 estimated by the Secretary of Labor for such prior
2 quaxter.
3 (3) The Secretary of the Treasury shall there­
4 upon, through the Division of Disbursement of the
5 Treasury Department and prior to audit or settlement
6 by the General Accounting Office, pay to the State, at
7 the time or times fixed by the Secretary of Labor, the
8 amount so certified.
9 OPERATION OF STATE PLANS

10 SEC. 515. In the case of any State plan for services

11 for crippled children which has been approved by the Chief
12 of the Children's Bureau,9 if the Secretary of Labor, after
13 (58)reasonable notice and opportunity for hearing to the
14 State agency administering or supervising the administration
15 of such plan, finds that in the administration of the plan there
16 is a failure to comply substantially with any provision
17 required by section 513 to be included in the plan, he shall
18 notify such State agency that further payments will not be
19 made to the State until he is satisfied that there is no longer
20 any such failure to comply. Until he is so satisfied he shall
21 make iio further certification to the Secretary of the Treas­
22 ury with respect to such State.
23 PART 3-CHILD-WELFARE SERVICES

24 (59)S~e- &24-1 -ofei the pur~pose of eiiabliif the Uiiited

25 States, thfeoigh the C~hild*&ef' Bir-eatt- to eeeperfAte wit
 37
1 St&te pablie weliafe aeiisi sa~hn, ~e

3 the p-et~eetieoi aMi efe of hoeleess, dpe~deiit-, aid nitegkd

4 ehildren, ai*d elildr-en ifi deange of beeeffgi delifqiaeft

6 yeaf, begini~e with the fiseal yeffi eidifg Am~e &0OI936

9 Sta~te- $4-0,OO0 affd siueh pa4 of the bafi~~ee as the iF1ffal

10 pep~ieo of stieh State bear- te the total fan~4 pepulatieii

11 of the Ui-4ted States. Tlhe afent~so ag1etted shal he e*-­
12 teended fei payffefit of pa4 4f the eosts of ee"t an4 leeal
13 ebild welfffe sei-viees iin *nial areas. Thie eaemnt of afty
14 a~1etmeiit to a State ufnde* tbis seetieff iff any fiseal ye"r

17 seetien ntilt the ea4 of the seeefd siueeeedifig fiseal yeaTF.

18 Noe pa-ymfe-ft to a State ffl3dfe this seetien shalg be made out
19 of its alletment fff afty &eea Yeff uftil its a etment feif
20 the Pr-eeeding fseal yeff hee heent exhauste of has eeaesed
21 t&be avagable.
22 SEC. 521. (a) For the purpose of enabling the United

23 States, through the Children's Bureau, to cooperate with

24 State public-welfare agencies in establishing, extending, and

25 strengthening, especially in predominantly rural areas, pub­

 38
1 lie-welfare services for the care of homeless or neglected

2 children, there is hereby authorized to be appropriatedfor

3 each fiscal year, beginning with the fiscal year ending June

4 30, 1936, the sum of $1,500,000. Such amount shall be

5 alloted by the Secretary of Labor for use by cooperating State

6 public-welfare agencies on the basis of plans developed jointly

7 by the State agency and the Children's Bureau, to each State,

8 $10,000, and the remainder to each State on the basis of such
9 plans, not to exceed such part of the remainder as the rural
10 population of such State bears to the total ruralpopulation of

11 the United States. The amount so allotted shall be expended

12 for payment of part of the cost of district, county or other local
13 child-welfare services in areas predominantly rural, and for

14 developing State services for the encouragement and assist­

15 ance of adequate methods of community child-welfare

16 organization in areas predominantly rural and other areas

17 of special need. The amount of any allotment to a State

18 under this section for any fiscal year remaining unpaid to

19 such State at the end of such fiscal year shall be available
20 for payment to such State under this section until the end

21 of the second succeeding fiscal year. No payment to a State

22 under this section shall be made out of its allotment for an~y

23 fiscal year until its allotment for the preceding fiscal year

24 has been exhausted or ha.- ceased to be available.

 39
1 (60)(b) From the sums appropriated therefor and the
2 allotments available under subsection (a) the Secretary of
3 Labor shall from time to time certify to the Secretary of the
4 Treasury the amounts to be paid to the States, and the

5 Secretary of the Treasury shall, through the Division of

6 Disbursement of the Treasury Department and prior to

7 audit or settlement by the General Accounting Office, make

8 payments of such amounts from such allotments at the time

9 or times specified by the Secretary of Labor.

10 PART 4-VOCATIONAL REHABILITATION

11 SEC. 531. (a) In order to enable the United States

12 to cooperate with the States and Hawaii in extending and
13 strengthening their programs of vocational rehabilitation of
14 the physically disabled, and to continue to carry out the
15 provisions and purposes of the Act entitled "An Act to
16 provide for the promotion of vocational rehabilitation of
17 persons disabled in industry or otherwise and their return
18 to civil employment ", approved June 2, 1920, as amended
19 (U-. S. C., title 29, ch. 4; U. S. C., Supp. VII, title 29,
20 secs. 31, 32, 34, 35, 37, 39, and 40), there is hereby
21 authorized to be appropriated for the fiscal years end­
22 ing June 30, 1936, and June 30, 1937, the sum of
23 $841,000 for each such fiscal year in addition to the
24 amount of the existing authorization, and for each fiscal year
 40
1 thereafter the sum of $1,938,000. Of the sums appropriated
2 pursuant to such authorization for each fiscal year, $5,000
3 shall be apportioned to the Territory of Hawaii and the re­
4 mainder shall be apportioned among the several States in the
5 manner provided in such Act of June 2, 1920, as amended.
6 (b) For the administration of such Act of June 2,
7 1920, as amended, by the (61>1Fedeia a~geney- &;4theized to
8 adminiieter- it Office of Education in the Department of the
9 Interior, there is hereby authorized to be appropriated
10 for the fiscal years ending June 30, 1936, and June 30,
11 1937, the sum of $22,000 for each such fiscal year in
12 addition to the amount of the existing authorization, and for
13 each fiscal year thereafter the sum of $102,000.
14 PART 5-ADMINISTRATION
15 SErc. 541. (a) There is hereby authorized to be appro­

16 priated for the fiscal year ending June 30, 1936, the sum
17 of $425,000, for all necessary expenses of the Chil­
18 dren's Bureau in administering the provisions of this title
19 (62), except section 531.
20 (b) The Children's Bureau shall make such studies
21 and investigations as will promote the efficient administration
22 of this title (63), except section 531.
23 (c) The Secretary of Labor shall include in his
24 annual report to Congress a full account of the administra­
25 tion of this title, except section 531.
 41
1 TITLE VI-PUBLIC HEALTH WORK
2 APPROPRIATION

3 SECTION 601. For the purpose of assisting States,

4 counties, health districts, and other political subdivisions of

5 the States in establishing and maintaining adequate public-
6 health services, including the training of personnel for State
7 and local health work, there is hereby authorized to be
8 appropriated for each fiscal year, beginning with the fiscal
9 year ending June 30, 1936, the sum of $8,000,000 to be
10 used as hereinafter provided.
11 STATE AND LOCAL PUBLIC UEALTH SERVICES

12 SEC. 602. (a) The Surgeon General of the Public

13 Health Service, with the approval of the Secretary of the
14 Treasury, shall, at the beginning of each fiscal year, allot
15 to the States the total of (1) the amount appropriated for
16 such year pursuant to section 601; and (2) the amounts of
17 the allotments under this section for the preceding fiscal year
18 remaining unpaid to the States at the end of such fiscal year.
19 The amounts of such allotments shall be determined on the
20 basis of (1) the population; (2) the special health problems;
21 and (3) the financial needs; of the respective States. Upon
22 making such allotments the Surgeon General of the Public
23 Health Service shall certify the amounts thereof to the Secre­
24 tary of the Treasury.
 42
1 (b) The amount of an allotment to any State under
2 subsection (a) for any fiscal year, remaining unpaid at the
3 end of such fiscal year, shall be available for allotment to
4 States under subsection (a) for the succeeding fiscal year, in
5 addition to the amount appropriated for such year.
6 ~(c) Prior to the beginning of each quarter of the fiscal
7 year, the Surgeon General of the Public Health Service shall,
8 with the approval of the Secretary of the Treasury, deter­
9 mine in accordance with rules and regulations (64)previously
10 prescribed by such Surgeon General after consultation with a
11 conference of the State and Territorial health authorities,
12 the amount to be paid to each State for such quarter from
13 the allotment to such State, and shall certify the amount
14 so determined to the Secretary of the Treasury. Upon
15 receipt of such certification, the Secretary of the Treasury
16 shall, through the Division of Disbursement of the Treasury
17 Department and prior to audit or settlement by the General
18 Accounting Office, pay in accordance with such certification.
19 (d) The moneys so paid to any State shall be expended
20 solely in carrying out the purposes specified in section 601,
21 and in accordance with plans presented by the health author­
22 ity of such State and approved by the Surgeon General of
23 the Public Health Service.
 43
1 INVE~STIGATIONS

2 SEC. 603. (a) There -is hereby authorized to be

3 appropriated for each fiscal year, beginning with the fiscal
4 year ending June 30, 1936, the sum of $2,000,000 for
5 expenditure by the Public Health Service for investigation
6 of disease and problems of sanitation (including the printing
7 and binding of the findings of such investigations), and for
8 the pay and allowances and traveling expenses of personnel
9 of the Public Health Service, including commissioned officers,
10 engaged in such investigations or detailed to cooperate with
1-1 thme health authorities of any State in carrying out the pur­
12 poses specified in section 601: Provided, That no personnel
13 of the Public Health Service shall be detailed to cooperate
14 with the health authorities of any State except at the request
1,5 of the proper authorities of such State.
16 (b) The personnel of the Public Health Service paid
17 from any appropriation not made pursuant to subsection
18 (a) may be detailed to assist in carrying out the purposes of
19 this title. The appropriation from which they are paid
20 shall be reimbursed from the appropriation made pursuant
21 to subsection (a) to the extent of their salaries and allow­
22 ances for services performed while so detailed.
23 (c) The Secretary of the Treasury shall include in his
24 annual report to Congress a full account of the administration
25 of this title.
 44
1 TITLE VII-SOCIAL SECURITY BOARD
2 ESTABLISHMENT

3 SECTION 701. There is hereby established (65)in the

4 Department of Labor a Social Security Board (in this Act
5 referred to as the "Board ") to be composed of three
6 members to be appointed by the President, by a~nd with the
7 atdvice and consent of the Senate. (66)During his term of
8 membership on the Board, no member shall engage in any
9 other business, vocation, or employment. Not more than
10 two of the members of the Board shall be members of the

11 same political party. Each member shall receive a salary

12 at the rate of $10,000 a year and shall hold office for a
13 term of six years, except that (1) any member appointed
14 to fill a vacancy occurring prior to the expiration of the
15 term for which his predecessor was appointed, shall be
16 appointed for the remainder of such term; and (2) the
17 terms of office of the members first taking office after the
18 date of the enactment of this Act shall expire, as designated
19 by the President at the tinme of appointment, one at the
20 end of two years, one a~t the end of four years, and one
21 at the end of six years, after the date of the enactment of
22 this Act. The President shall designate one of the members
23 as the chairman of the Board.
 45

1 DUTIES OF SOCIAL SECURITY BOARD

2 SEC. 702. (67)(a) The Board shall perform the

3 duties imposed upon it by this Act and shall also have the
4 duty of studying and making recommendations as to the
5 most effective methods of providing economic security

6 through social insurance, and as to legislation and matters

7 of administrative policy concerning old-age pensions, unem­

8 ployment compensation, accident compensation, and related

9 subjects.

10 (68)(b) The Board shall receive applications from em­

11 ployers who desire to operate private annuity plans with a

12 view to providing benefits in lieu of the benefits otherwise

13 provided for in title II of this Act, and the Board shall
14 approve any such plan and issue a certificate of such ap­
15 proval if it finds that such plan meets the following
16 requirements:
17 (1) The plan shall be available, without limita­
18 tion as to age, to any employee who elects to come
19 under such plan: Provided, That no employer shall
20 make election to come or remain under the plan a con­
21 dition precedent to the securing or retention of
22 employment.
23 (2) The benefits payable at retirement and the
24 conditions as to retirement shall not be less favorable,
 46
1 based upon accepted actuarial principles, than those
2 provided for under section 202.
3 (3) The contributions of the employee and the

4 employer shall 'be deposited with a life insurance corn­

5 pany, an annuity organization, or a trustee, approved

6 by the Board.
7 (4) Termination of employment shall constitute

8 withdrawal from the plan.

9 (5) Upon the death of an employee, his estate

10 shall receive an amount not less than the amount it

11. would have received if the employee had been entitled
12 to receive benefits under title-II of this Act.
13 (c) The Board shall have the right to call for such

14 reports from the employer and to make siwh inspections of

15 his records as will satisfy it that the requirements of sub­

16 section (b) are being met, and to make such regulations as

17 will facilitate the operation of such private annuity plans in

18 conformity with such requirements.
19 (d) The Board shall withdraw its approval of any

20 such plan upon the request of the employer, or if it finds that

21 the plan or any action taken thereunder fails to meet the
22 requirements of subsection (b).
23 EXPENSES OF TIE BOARDl

24 SEC. 703. The Board is authorized to appoint and fix

25 the compensation of such officers and employees, and to
 47
'I make such expenditures, as may be necessary for carrying
2 out its functions under this Act. (69)Appointments of
.3 attorneys and experts may be made without regard to the

4 civil-service laws.
5 REPORTS

61 SEC. 704. The Board(70), through the Secretary of

7 Labor, shall makie a ful report to Congress, at the beginning

8 of each regular session, of the administration of the functions
9 with which it is charged.
10 TITLE VIJI-TAXES WITH RESPECT TO
11 EMPLOYMENT
12 INCOME TAX ON EMPLOYEES

13 SECTION 801. In addition to other taxes, there shall be

14 levied, collected, and paid upon the income of every indi­
15 vidual a tax equal to the following percentages of the wages
16 (as defined in section 81 1) received by him after December
17 31, 1936, with respect to employment (as defined in section
18 811) after such date:
19 (1) With respect to employment during the calendar
20 years 1937, 1938, and 1939, the rate shall be 1 per centum.
21 (2) With respect to employment during the calendar
22 years 1940, 1941, and 1942, the rate shall be if per centum.
23 (3) With respect to employment during the calendar
24 years 1943, 1944, and 1945, the rate shall be 2 per centum..
25 (4) With respect to employment during the calendar
 48
1 years 1946, 1947, and 1948, the rate shall be 21 per
2 centum.
3 (5) With respect to employment after December 31,
4 1948, the rate shall be 3 per centmn.
5 DEDUCTION OF TAX FROM WAGES

6 SEC. 802. (a) The tax imposed by section 801 shall

7 be collected by the employer of the taxpayer, by deduct­
8 ing the amount of the tax from the wages as and when
9 paid. Every employer required so to deduct the tax is
10 hereby made liable for the payment of such tax, and is
11 hereby indemnified against the claims and demands of any
12 person for the amount of any such payment made by such
13 employer.
14 (b) If more or less than the correct amount of tax
1.5 imposed by section 801 is paid with respect to any wage pays­
16 ment, then, under regulations made under this title, proper
17 adjustments, with respect both to the tax and the amount
18 to be deducted, shall. be made (71), without interest, in
19 connection with subsequent wage payments to the same
20 individual by the same employer.
21 DEDUCTIB1hITY FROM INCOME TAX

22 SEC. 803. For the purposes of the income tax imposed

23 by Title I of the Revenue Act of 1934 or by any Act of
24 Congress in substitution theref or, the tax imposed by sec­
25 tion 801 shall not be allowed as a deduction to the taxpayer
 49
1 in computing his net income for the year in which such
2 tax is deducted from his wages.
3 EXCISE TAX ON EMPLOYERS

4 SEC. 804. In addition to other taxes, every employer

5 shall pay an excise tax, with respect to having individuals
6 in his employ, equal to the following percentages of the
7 wages (as defined in section 811) paid by him afte~r Decem­
8 her 31, 1936, with respect to employment (as defined in
9 section 811) after such date:
10 (1) With respect to employment during the calendar
11 years 1937, 1938, and 1939, the rate shall be 1 per centum.
12 (2) With respect to employment during the calendar
13 years 1940, 1941, and 1942, the rate shall be 1.1 per
14 centum.
15 (3) With respect to employment during the calendar
16 years 1943, 1944, and 1945, the rate shall be 2 per centum.
17 (4) With respect to employment during the calendar
18 years 1946, 1947, and 1948, the rate shall be 2+ per
19 centum.
20 (5) With respect to employment after December 31,
21 1948, the rate shall be 3 per centumn.
22 ADJUSTMENT OF EMPLOYERS' TAX

23 SEC. 805. If more or less than the correct amount of

24 tax imposed by section 804 is paid with respect to any wage
25 payment, then, under regulations made under this title,
IEL R. 7260­
 50

1 proper adjustments with respect to the tax shall be

2 made (72), without interest, in connection with subsequent
3 wage payments to the same individual by the same employer.
4- REFUNDS AND DEFICIENCIES

5 SEC. 806. If more or less than the correct amount

6 of tax imposed by section 801 or 804 is paid or deducted

7 with respect to any wage payment and the overpayment or
8 underpayment of tax cannot be adjusted under section 802 (b)
9 or 805 the amount of the overpayment shall be refunded
10 and the amount of the underpayment shall be collected,
11 in such manner and at such times (subject to the statutes
12 of limitations properly applicable thereto) as may be pre­
13 scribed by regulations made under this title.
14 COLLECTION AND PAYMENT OF TAXES

15 SEC. 807. (a) The taxes imposed by this title shall

16 be collected by the Bureau of Internal Revenue under the
17 direction of the Secretary of the Treasury and shall be
18 paid into the Treasury of the United States as internal­
19 revenue collections. (7 3)1/ the tax is not paid when due,
20 there shall be added as part of the tax interest (except in the

21 case of adjustments made in accordancewith the provisions of

22 sections 802 (b) and 805) at the rate of one-half.per centum

23 per month from the date the tax became due until paid.

24 (b) Such taxes shall be collected and paid in suchb

25 manner, at such times, and under such conditions, not incon­
26 sistent with this title (either by making and filing returns,
 51

1 or by stamps, coupons, tickets, books, or other reasonable

2 devices or methods necessary or helpful in securing a comn­
3 plete and proper collection and payment of the tax or in

4 securing proper identification of the taxpayer) , as may be

5 prescribed by the Commissioner of Internal Revenue, with
6 the approval of the Secretary of the Treasury.
7 (c) All provisions of law, including penalties, appli­

8 cable with respect to any tax imposed by section 600 or

9 section 800 of the Revenue Act of 1926, and the provisions
10 of section 607 of the Revenue Act of 1934, shall, insofar

11 as applicable and not inconsistent with the provisions of this

12 title, be applicable with respect to the taxes imposed by this
13 title.

14 (d) In the payment of any tax under this title, a frac­

15 tional part of a cent shall be disregarded unless it amounts
16 to one-bali cent or more, in which case it shall be increased

17 to 1 cent.
18 RULES AND REGULATIONS

19 SEC. 808. The Commissioner of Internal Revenue,

20 with the approval of the Secretary of the Treasury, shall

21 make and publish rules and regulations for the enforcement

22 of this title.
23 SALE OF STAMPS BY POSTMASTERS

24 SEC. 809. The Commissioner of Internal Revenue

25 shall furnish to the Postmaster General without prepayment

 52
1 a suitable quantity of stamps, coupons, tickets, books, or
2 other devices prescribed by the Commissioner under section
3 807 for the collection or payment of any tax imposed by this
4 title, to be distributed to, and kept on sale by, all post offices
5 of the first and second classes, and such post offices of the
6 third and fourth classes as (1) are located in county seats,
7 or (2) are certified by the Secretary of the Treasury to
8 the Postmaster General as necessary to the proper admninis­
9 tration of this title. The Postmaster General may require
10 each such postmaster to furnish bond in such increased
11 amount as he may from time to time determine, and
12 each such postmaster shall deposit the receipts from the
13 sale of such stamps, coupons, tickets, books, or other
14 devices, to the credit of, and render accounts to, the Post­
15 master General at such times and in such form as the
16 Postmaster General may by regulations prescribe. The
17 Postmaster General shall at least once a month transfer to
18 the Treasury as internal-revenue collections all receipts so
19 deposited (74)together with a statement of the additional
20 expenditures in the District of Columbia and elsewhere
21 incurred by the Post Office Department in performing the
22 duties imposed upon said Department by this Act, and the
23 Secretary of the Treasury is hereby authorized and directed
24 to advance from time to time to the credit of the Post Office
 53
1 Department from appropriationsmade for the collection and

2 paymemt of taxes provided under -section-707-of this title, such

3 sums as may be required for such additional expenditures

4 incurred by the Post Office Department in the performance

5 of the duties,and functions required of the Postal Service by

6 this Act,
7 PENALTIES

8 SmC. 810. (a) Whoever buys, sells, offers for sale,

9 uses, transfers, takes or gives in exchange, or pledges or
10 gives in pledge, except as authorized in this title or in
11 regulations made pursuant thereto, any stamp, coupon, ticket,
12 book, or other device, prescribed by the Commissioner of
13 Internal Revenue under section 807 for the collection or
14 payment of any tax imposed by this title, shall be fined not
1,5 more than $1,000 or imprisoned for not more than six
16 months, or both.
17 (b) Whoever, with intent to defraud, alters, forges,
18 makes, or counterfeits any stamp, coupon, ticket, book, or
19 other device prescribed by the Commissioner of Internal
20 Revenue under section 807 for the collection or payment of
21 any tax imposed by this title, or uses, sells, lends, or has in
22 his possession any such altered, forged, or counterfeited
23 stamp, coupon, ticket, book, or other device, or makes, uses,
24 sells, or has in his possession any material in imitation of the
 54
1 material used in the manufacture of such stamp, coupon,
2 ticket, book, or other device, shall be fined not more than
3 $5,000 or imprisoned not. more than five years, or both.
4 DEFINITIONS

5 SEc. 811. When used in this title.­

6 (a) The term " wages " means all remuneration for
7 employment, including the cash value of all remuneration
8 paid in any medium other than cash; except that such term
9 shall not include that part of the remuneration which, after
10 remiuneration equal to $3,000 has been paid to an individual
11 by an employer with respect to employment during any
12 calendar year, is paid to such individual by such employer
1.3 with respect to employment during such calendar year.
14 (b) The term " employment " means any service, of
1,5 whatever nature, performned within the United States(75),
16 or as an officer or member of the crew of a vessel documented

17 under the laws of the United States, by an employee for his

18 employer, except­
19 (1) Agricultural labor;
20 (2) Domestic service in a private home;
21 (3) Casual labor not in the course of the em­
22 ployer's trade or business;
23 (76)(44- Seiwiee pef 4emi~ed 4y &R individif ~who has
24 attained the a~ge of oey
-fiive­
 55

1 (77)-(5) Sei-,4ee jperfe~n~e4 ", ant effiee o membr

2 ofthe re f essel deumntd kaethe laws o
3 the United States ef of any fereign eeimntiy;
4 (78)-443) (4) Service performed in the employ of the
5 U~nited States Government or of an instrumentality of

6 the United States;

7 (79)-(--) (5) Service performed in the employ of a

8 State, a political subdivision thereof, or an instrumen­

9 tality of one or more States or political subdivisions;

10 (80)484- (6) Service performed in the employ of a

it corporation, community chest, fund, or foundation,
12 organized and operated exclusively for religious, char­
13 itable, scientific, literary, (8 1)of editeeAienl educa­

14 tional or hospital purposes, (82)or for the prevention

15 of cruelty to children or animals, no part of the net
16 earnings of which inures to the benefit of any private
17 shareholder or individual.
18 (83) (7) Service performed by an employee before he attains

19 the age of sixty-five in the employ of an employer who has

20 in operation a plan providing annuities to employees which
21 is certified by the Board as having been approved by it under

22 section 702, if the employee has elected to come under such

23 plan, and if the Commissioner of Internal Revenue deter­
24 mines that the aggregate annual contributions of the employee
25 and the employer under such plan as approved are not less
 56

1 than the taxes which would otherwise be payable under

2 sections 801 and 804, and that the employer pays an amount
3 (
at least equal to 50 per centum of such taxes Provided,

4 /That if any such employee withdraws from the plan before

5 he attains the age of sixty-five, or if the Board withdraws its

6 approval of the plan, there shall be paid by the employer to

7 the Treasurer of the United States, in such manner as the

8 Secretary of the Treasury shall prescribe, an amount equal

9 to the taxes which would otherwise have been payable by the

10 employer and the employee on account of such service,

11 together with interest on such amount at 3 per centum per
12 annum compounded annually.

13 (84)SEc. 812. (a) It shall be unlawful for any emptoyer

14 to make with any insurance company, annuity organization

1.5 or trustee any contract with respect to carrying out a private

16 annuity plan approved by the Board under section 702, if

17 any director, officer, employee, or shareholderof the employer

18 is at the same time a director, officer, employee, or share­

19 holder of the insurance company, annuity organization or

20 trustee.

21 (b) It shall be unlawful for any person, whether

22 employer or insurance company, annuity organization or

23 trustee, to knowingly offer, grant, or give, or solicit, accept,

24 or receive, any rebate against the charges payable under any

25 contract carrying out a private annuity plan approved by

26 the Board under section 702.

 57
1 (c) Every insurance company, annuity organization
2 or trustee, who makes any contract with any employer for
3 carrying out a private annuity plan of such employer which

4 has been approved byj the Board under section 702, shall
5 make, keep and preserve for such periods, such accounts,

6 correspondence, memoranda, papers, books, and other

7 records with respect to such contract and the financial trans­

8 actions of such company, organization or trustee as the

9 Board may deem necessary to ensure the proper carrying

10 out of such contract and to prevent fraud and collusion.

11 All such accounts, correspondence, memoranda, papers,

12 books, and other records shall be subject at any time, and

13 from time to time, to such reasonable periodic, special, and

14 other examinations by the Board as the Board may prescribe.

15 (d) Any person violating any provision of this section
16 shall be deemed guilty of a misdemeanor and, upon convic­
17 tion thereof, shall be punished by a fine of not more than
18 $10,000, or imprisonment for not more than one year, or

19 both.
20 TITLE IX-TAX ON EMPLOYERS OF (85)TEN
21 FOUR OR MORE
22 IMPOSITION OF TAX

23 SECTION 901. On and after January 1, 1936, every

24 employer (as defined in section 907) shall pay for each
25 calendar year an excise tax, with respect to having indi­
 58
1 viduals in his employ, equal to the following percentages of
2 the total wages (as defined in section 907) payable by
3 him (regardless of the time of payment) with respect to
4 employment (as defined in section 907) during such
5 calendar year:
6 (1) With respect to employment during the calendar
7 year 1936 the rate shall be 1 per centum;
8 (2) With respect to employment during the calendar
9 year 1937 the rate shall be 2 per centum;
10 (3) With respect to employment after December 31,
11 1937, the rate shall be 3 per centum.
12 CREDIT AGAINST TAX

13 SEC. 902. The taxpayer may credit against the tax

14 imposed by section 901 the amount of contributions, with
15 respect to employment during the taxable year, paid by
16 him (before the date of filing his return for the taxable
17 year) into an unemployment fund under a State law. The
18 total credit allowed to a taxpayer under this section for all
19 contributions paid into unemployment funds with respect
20 to employment during such taxable year shall not exceed
21 90 per centum. of the tax against which it is credited, and
22 credit shall be allowed only for contributions made under
23 the laws of States certified for the taxable year as provided
24 in section 903.
 59
1 CERTIFTCATION OF STATE LAWS

2 SEc. 903. (a) The Social Security Board shall

3 approve any State law submitted to it, within thirty days of
4 such submission, which it finds provides that­

5 (1) (86)A41 eompetsa~tieft Compensation is to be

6 paid through public employment offices in the State

7 (87), to the extent that such offices exist and are desig­
8 nated by the State for the purpose;
9 (2) No compensation shall be payable with
10 respect to any day of unemployment occurring within

11 two years after the first day of the first period with
12 respect to which contributions are required;
13 (3) All money received in the UTnemployment
14 fund shall immediately upon such receipt he paid over

15 to the Secretary of the Treasury to the credit of the

16 'Unemployment Trust Fund established by section
17 904;
18 (4) All money withdrawn from the Unemploy­
19 ment Trust Fund by the State agency shall be used

20 solely in the payment of compensation, exclusive of

21 expenses of administration;
22 (5) Compensation shall not be denied in such
23 State to any otherwise eligible individual for refusing to

24 accept new work under any of the following condi­

25 tions: (A) If the position offered is vacant due directly

 60
I to a strike, lockout, or other labor dispute; (B) if the
2 wages, hours, or other conditions of the work offered
3 are substantially less favorable to the individual than
4 those prevailing for similar work in the locality; (C)
5 if as a condition of being employed the individual
6 would be required to join a company union or to resign
7 from or refrain from joining any bona fide labor
8 organization;
9 (6) All the rights, privileges, or immunities con­
10 ferred by such law or by acts done pursuant thereto
11 shall exist subject to the power of the legislature to
12 amend or repeal such law at any time.
13 The Board shall, upon approving such law, notify the Gov­
14 ernor of the State of its approval.
15 (b) On December 31 in each taxable year the Board
16 shall certify to the Secretary of the Treasury each State
17 whose law it has previously approved, except that it shall
18 not certify any State which, after (88>reasonablenotice and
19 opportunity for hearing to the State agency, the Board finds
20 has changed its law so that it no longer contains the
21 provisions specified in subsection (a) or has with respect
22 to such taxable year failed to comply substantially with any
23 such provision.
24 (c) If, at any time during the taxable year, the Board
25 has reason to believe that a State whose law it has pre­
 61
1 viously approved, may not be certified under subsection (b),
2 it shall promptly so notify the Governor of such State.
3 UNEMPLOYMENT TRUST FUND

4 Smc. 904. (a) There is hereby established in the

5 Treasury of the United States a trust fund to be known as
6 the " Unemployment Trust Fund ", hereinafter in this title
7 called the " Fund ". The Secretary of the Treasury is
8 authorized and directed to receive and hold in the Fund
9 all moneys deposited therein by a State agency from a State
10 unemployment fund. Such deposit may be made directly
11 with the Secretary of the Treasury or with any Federal
12 reserve bank or member bank of the Federal Reserve Sys­
13 tem designated by him for such purpose.
14 (b) It shall be the duty of the Secretary of the
15 Treasury to invest such portion of the Fund as is not, in
16 his judgment, required to meet current withdrawals. Such
17 investment may be made only in interest hearing obligations
18 of the 'United States or in obligations guaranteed as to both
19 principal and interest by the United States. For such
20 purpose such obligations may be acquired (1) on original
21 issue at par, or (2) by purchase of outstanding obligations
22 at the market price. The purposes for which obligations
23 of the United States may be issued under the Second Lib­
24 erty Bond Act, as amended, are hereby extended to authorize
25 the issuance at par of special obligations exclusively to the
 62
1 Fund. Such special obligations shall bear interest at a
2 ratc equal to the average rate of interest, computed as of

3 the end of the calendar month next preceding the date of

4 such issue, borne by all interest-bearing obligations of the

5 'United States then forming part of the public debt; except

6 that where such average rate is not a multiple of one-eighth
7 of I per centum, the rate of interest of such special obliga­

8 tions shall be the multiple of one-eighth of 1 per centuin

9 next lower than such average rate. Obligations other than

10 such special obligations may be acquired for the Fund only

11 on such terms as to provide an investment yield not less
12 than the yield which would be required in the case of
13 special obligations if issued to the Fund upon the date of

14 such acquisition.
15 (c) Any obligations tacquired by the Fund (except
16 special obligations issued exclusively to the Fund) may be
17 sold at the market price, and such special obligations may bt
18 redeemed at par plus accrued interest.

19 (d) The interest on, and the proceeds from the sale or
20 redemption of, any obligations held in the Fund shall be

21 credited to and form a part of the Fund.

22 (e) The Fund shall be invested as a single fund, but

23 the Secretary of the Treasury shall maintain a separate book
24 account for each State agency and shall credit quarterly on

25 March 31, June 30, September 30, and December 31, of

 63

1 each year, to each account, on the basis of the average

2 daily balance of such account, a proportionate part of the

3 earnings of the Fiund for the quarter ending on such date.

4 (f) The Secretary of the Treasury is authorized and

5 directed to pay out of the Fund to any State agency such
6 amount as it may duly requisition, not exceeding the amount

7 standing to the account of such State agency at the time

8 of such payment.
9 ADMINISTRATION, REFUNDS, AND PENALTIES

10 SEC. 905. (a) The tax imposed by this title shall be

11 collected by the Bureau of Internal Revenue under the direc­
12 tion of the Secretary of the Treasury and shall be paid into

13 the Treasury of the United States as internal-revenue

14 collections. (89)If the tax is not paid when due, there shall

15 be added as part of the tax interest at the rate of one-half of 1

16 per centum per month from the date the tax became due until
17 paid.
18. (b) Not later than January 31, next following the

19 close of the taxable year, each employer shall make a

20 return of the tax under this title for such taxable year.
21 Each such return shall be made under oath, shall be filed
22 with the collector of internal revenue for the district in which
23 is located the principal place of business of the employer,
24 or, if he has no principal place of business in the United
25 States, then with the collector at Baltimore, Maryland,
 64
1 and shall contain such information and be made in such
2 man-ner as the Commissioner of Internal Revenue, with the
3 approval of the Secretary of the Treasury, may by regula­
4 tions prescribe. All provisions of law (including penalties)
5 applicable in respect of the taxes imposed by section 600 of
6 the Revenue Act of 1926, shall, insofar as not inconsistent
7 with this title, be applicable i-n respect of the tax imposed
8 by this title. The Commissioner may extend the time for
9 filing the return of the tax imposed by this title, under such
10 rules and regulations as he may prescribe with the approval
11 of the Secretary of the Treasury, but no such extension sha]]
12 be for more than sixty days.
13 (c) Returns filed under this title shall be open to in­
14 spection in the same manner, to the same extent, and sub­
15 ject to the same Provisions of law, including penalties, as
16 returns made under Title II of the Revenue Act of 1926.
17 (d) The taxpayer may elect to pay the tax in four
18. equal installments instead of in a single payment, in which
19 case the first installment shall be paid not later than the
20 last day prescribed for the filing of returns, the second in­
21 stallinent shall be paid on or before the last day of the
22 third month,- the third installment on or before the last day
23 of the sixth month, and the fourth installment on or before
24 the last day of the ninth month, after such last day. If the
25 tax or any installment thereof is not paid on or before the
 65
1 last day of the period fixed for its payment, the whole
2 amount of the tax unpaid shall be paid upon notice and
3 demand from the collector.
4 (e) At the request of the taxpayer the time for pay­
5 ment of the tax or any installment thereof may be ex­
6 tended under regulations prescribed by the Commissioner
7 with the approval of the Secretary of the Treasury, for a
8 period not to exceed six months from the last day of the
9 period prescribed for the payment of the tax or any install­
10 ment thereof. The amount of the tax in respect of which
11 any extension is granted shall be paid (with interest at
12 the rate of one-half of 1 per centum per month) on or before
13 the date of the expiration of the period of the extension.
14 (f) In the payment of any tax under this title a frac­
15 tional part of a cent shall be disregarded unless it amounts
16,) to one-half cent or more, in which case it shall be increased
17 to 1 cent.
18 INTERSTATE COMMERCE

19 SEC. 906. No person required under a State law to

20 make payments to an unemployment fund shall be relieved
21 from compliance therewith on the ground that he is engaged
22 in interstate commerce, or that the State law does not
23 distinguish between employees engaged in interstate com­
24 merce and those engaged in intrastate commerce.
1. R. 7260 5
 66
1 DEFTNITIONS

2 SiEc. 907. When used in this title­

3 (a) The term " employer " does not include any person
4 unless on each of some (90)twefity thirteen days during the
5 taxable year, each day being in a different calendar week,
6 the total number of individuals who were in his employ for
7 some portion of the day (whether or not at the same moment
8 of time) was (91)ten four or more.
9 (b) The term " wages " means all remuneration for
10 employment, including the cash value of all remuneration
11 paid in any medium other than cash.
12 (c) The term " employment " means any service, of
13 whatever nature, performed within the United States by an
14 employee for his employer, except­
15 (1) Agricultural labor;
16 (2) Domestic service in a private home;
17 (3) Service performed as an officer or member
18 of the crew of a vessel on the navigable waters of the
19 United States;
20 (4) Service performed by an individual in the
21 employ of his son, daughter, or spouse, and service
22 performed by a child under the age of twenty-one in
23 the employ of his father or mother;
24 (5) Service performed in the employ of the
25 United States Government or of an instrumentality of
26 the United States;
 67
1 (6) Service performed in the employ of a State,

2 a political subdivision thereof, or an instrumientality of

3 one or more States or political subdivisions;
4 (7) Service performned in the employ of a corpo­
5 ration, community chest, fund, or foundation, organ­

6 ized and operated exclusively for religious, charitable,

7 scientific, literary, (92)efr euea~tieial educational or

8 hospital purposes, (93)Qr for the prevention of cruelty

9 to children or animals, no part of the net earnings of
10 which inures to the benefit of any private shareholder

11 or individual.
12 (d) The term " State agency " means any State officer,
13 board, or other authority, designated under a State law to

14 administer the unemployment fund in such State.

15 (e) The term " unemployment fund " means a special
16 fund, established under a State law and administered by a
17 State agency, for the payment of compensation (94)-f4 the
18 assets of whieh ffe mningled fai~d tffidivded, enA ina whieh
19 He sepafete fteeeimt is Rilaft~med wit f-espee to a"y
20 per-so .
21 (f) The term " contributions " means payments re­
22 quired by a State law to be made by an employer into an
23 unemployment fund, to the extent that such payments are
24 made by him without any part thereof being deducted or
25 deductible from the wages of individuals in his employ.
 68
1 (g) The term "compensation" means cash benefits
2 payable to individuals with respect to their unemployment.
3 RULES AND REGULATIONS

4 SEC. 908. The Commissioner of Internal Revenue,

5 with the approval of the Secretary of the Treasury, shall
6 make and publish rules and regulations for the enforcement
7 of this title, except sections 903 (95)a~d 904, 904, and 910.
8 (96)ALLOwVANCE OF ADDITIONAL CREDIT

9 SEx. 909. (a) In addition to the credit allowed under

10 section 902, a taxpayer may, subject to the conditions im­
11 posed by section 910, credit against the tax imposed by sec­
12 tion 901 for any taxable year after the taxable year 1937,

13 an amount, with respect to each State law, equal to the

14 amount, if any, by which the contributions, with respect to

15 employment in such taxable year, actually paid by the tax­

16 payer under such law before the date of filing his return for
17 such taxable year, is exceeded by whichever of the following

18 is the lesser­
19 (1) The amount of contributions which he would
20 have been required to pay under such law for such
21 taxable year if he had been subject to the highest rate

22 applicable from time to time throughout such. year to

23 any employer under such law; or
24 (2) Two and seven-tenths per centum of the wages
25 payable by him with respect to employment with respect
 69
1 to which contributions for such year were required

2 under such law.

B (b) If/the amount of the contributions actually so paid
4 by the taxpayer is less than the amount which he should have
5 paid under the State law, the additional credit under sub­
6 section (a) shall be reduced proportionately.
7 (c) The total credits allowed to a taxpayer under this
8 title shall not exceed 90 per centum of the tax against which
9 such credits are taken.
10 (97)coNDiTioNs OF ADDITIONAL CREDIT ALLOWANCE

11 SEC. 910. (a) A taxpayer shall be allowed the addi­

12 tional credit under section 909, with respect to his contri­
13 bution rate under a State law being lower, for any taxable

14 year, than that of another employer subject to such law, only

15 if the Board finds that under such law­
16 (1) Such lower rate, with respect to contributions
17 to a pooled fund, is permitted on the basis of not less
18 than three years of compensation experience;
19 (2) Such lower rate, with respect to contributions
20 to a guaranteed employment account, is permitted only
21 when his guaranty of employment was fulfilled in the
22 preceding calendar year, and such guaranteed employ­
23 ment account amounts to not less than 7+1 per centum
24 of the total wages payable by him, in accordance with
 70

I such guaranty, with respect to employment in such State

2 in the preceding calendar year;
3 (3) Such lower rate, with respect to contribu­

4 tions to a separate reserve account, is permitted only

5 when (A) compensation has been payable from such

6 account throughout the preceding calendar year, and
7 (B) such account amounts to not less than five times

8 the largest amount of compensation paid from such

9 account within any one of the three preceding calendar
10 years, and (C) such account amounts to not less than

11 7-i- per centun of the total wages payable by him (plus

12 the total wages payable by any other employers who may
13 be contributing to such account) with respect to employ­

14 ment in such State in the preceding calendar year.

15 (b) Such additional credit shall be reduced, if any
16 contributions under such law are made by such taxpayer

17 at a lower rate under conditions not fulfilling the require­

18 ments of subsection (a), by the amount bearing the same
19 ratio to such additional credit as the amount of contribu­

20 tions made at such lower rate bears to the total of his con­
21 tributions paid for such year under such law.

22 (c) As used in this section­

23 (1) The term "reserve account" means a sepa­
24 rate account in an unemployment fund, with respect to
25 an employer or group of employers, from which com­
 71

1 pensation is payable only with respect to the unemploy­

2 ment of individuals who were in the employ of such em­
3 ployer, or of one of the employers comprising the group.

4 (2) The term " pooled fund " means an unemploy­

5 ment fund or any part thereof in which all contributions

6 are mingled and undivided, and from which cornpen­

7 sation is payable to all eligible individuals, except that

8 to individuals last employed by employers with respect

9 to whom reserve accounts are maintained by the State
10 agency, it is payable only when such accounts are

11 exhausted.
12 (3) The term " guaranteed employment account"
13 means a separate account, in an unemployment fund,
t4 Of contributions paid by an employer (or group of

115 employers) who

1(3 (A) guarantees in advance thirty hours of
17 wages for each of forty calendar weeks (or more,

I18 with one weekly hour deducted for each added week
19 guaranteed) in twelve months, to all the individuals

20 in his employ in one or more distinct establish­

21 ments, except that any such individual's guaranty

22 may commence after a probationary period (in­
23 cluded within twelve or less consecutive calendar
9)4 weeks), and
 72

1 (B) gives security or assurance, satisfactorij

2 to the State agency, for the fulfillment of such

3 guaranties,

4 from which account compensation shall be payable with

5 respect to the unemployment of any such individual

6 whose guaranty is not fulfilled or renewed and who is

7 otherwise eligible for compensation under the State law.
8 (4) The term " year of compensation experience ",
9 as applied to an employer, means any calendar year

10 throughout which compensation was payable with

11 respect to any individual in his employ who became

12 unemployed and was eligible for compensation.

13 (98)TITLE X-GRANTS TO STATES FOR AID

14 TO THE BLIND
15 (99)APPROPRIATION

16 SECTION 1001. For the purpose of enabling each State

17 to furnish finmcaw- assistance, as far as practicableunder the

18 conditions in such State, to needy individuals who are pr

19 manently blind, there is hereby authorized to be appropriated

20 for the fiscal year ending June 30, 1936, the sum of

21 $3,000,000, and there is hereby authorized to be appropri­

22 ated for each fiscal year thereafter a sum sufficient to carry

23 out the purposes of this title. The sums made available under
24 this section shall be used for making payments to States which

25 have submitted, and had approved by the Social Security

 73

I Board, State plans for aid to the blind. Of said sum, each

2 year $1,50.0,000 or such part thereof as shall be necessary

B shall be used in making payments to States of amounts equal
4 to one-half of the total of the sums expended for locating
5 blind persons, for providing diagnoses of their eye condition,

6 and for training and employment of the adult blind.

7 (100)STATE PLANS FOR AID TO THE BLIND

8 SEc. 1002. (a) A State plan for aid to the blind

9 must (1) provide that it shall be in effect in all political

10 subdivisions of the State, and, if administered by them, be

11 mandatory upon them; (2) provide for financial participa­

12 tion by the State; (3) either provide for the establishment
13 or designation of a single State agency to administer the
14 plan, or provide for the establishment or designation of a
15 single State agency to supervise the administration of the
16 plan; (4) provide for granting to any individual, whose
17 claim for aid is denied, an opportunity for a fair hearing

18. before such State agency; (5) provide such methods of

19 administration (other than those relating to selection, tenure

20 of office, and compensation of personnel) as are found by

21 the Board to be necessary for the efficient operation of the

22 plan; (6) provide that the State agency will make such
23 reports, in such form and containing such information, as
24 the Board may from time to time require, and comply with

25 such provisions as the Board may from time to time find

 74
1 necessary to assure the correctness and verification of such
21 reports;and (7,) provide that no aid will be furnished any
3 individual under the plan with respect to any period with
4 respect to which lhe is receiving old-age assistance under the

5 State plan approved under section 2 of this Act (8) provide

6 that money payments to any permanently bhind individual

7 will be granted in direct proportion to his need; and (9)

8 contain a defiition of blindness and a definition of needy

9 individuals which will meet the approval of the Social

10 Security Board.
11 (b) The Board shall approve any plan which fulfills
12 the conditions specified in subsection (a),- except that it shall
13 not approve any plan which imposes, as a condition of

14 eligibility for aid to the blind under the plan­

15 (1) Any residence requirement which excludes
16 any resident of the State who has resided therein five
17 years during the nine years immediately preceding the
18. application for aid and has resided therein continuously
19 for one year immediately preceding the application; or
20 (2) Any citizenship requirement which excludes

21 any citizen of the United States.

22 (10 1)PAYMENT TO STATES

23 Smc. 1003. (a) From the sums appropriatedtherefor,

24 the Secretary of the Treasury shall pay to each State which
25 has an approved plan for aid to the blind, for each quarter,
 75
1 beginning with the quarter commencing July 1, 1935, (1)
2 an amount, which shall be used exclusively as aid to the blind,
3 equal to one-half of the total of the sums expended during such
4 quarter as aid to the blind under the State plan with respect

5 to each individual who is perimnauntl~y blind and is not a~n

6 inmate of a public-insti-tution. not counting so much of O"~

7 ea~cnditure witA respect to any individual for any month as

8 exceed5$30, and (2) 5 per centum, of such amount, which

9 shall be used for paying the costs of administering the State

10 plan or for aid to the blind, or both, and for no other purpose.
11 (b) The method of computing and paying such amounts
12 shall be as follows:
13 (1) The Board shall, prior to the beginning of

14 each quarter, estimate the amount to be paid to the

15 State for such quarter under the provisions of clause
16 (1) of subsection (a), such estimate to be based
17 on (A) a report filed by the State containing its

18 estimate of the total sum, to be expended in such quarter

19 in accordance with the provisions of such clause, and
20 stating the amount appropriated or made available by

21 the State and its political subdivisions for such expendi­

22 tures in such quarter, and if such amount is less than
23 one-half of the total sum of such estimated expenditures,
24 the source or sources from which the difference is ex­
25 pected to be derived, (B) records showing the number
 76

1of permanently blind individuals in the State, and (C)

2 such other investigation as the Board may find neces-
Bsary.

4 (2) The Board shall then certify to the Secretary

5 of the Treasury the amount so estimated by the Board,

6 reduced or increased, as the case may be, by any sum

7 by which it finds that its estimate for any prior quarter

8 was greater or less than the amount which should have

9 been paid to the State under clause (1) of sub­

10 section (a) for such quarter, except to the extent that

11 such sum has been applied to make the amount certified

12 for any prior quarter greater or less than the amount
13 estimated by the Board for such prior quarter.

14 (3) The Secretary of the Treasury shall there­

15 upon, through the Division of Disbursement of the

16 Treasury Department and prior to audit or settlement

17 by the General Accounting Office, pay to the State,
18 at the time or times fixed by the Board, the amount
19 so certified, increased by 5 per centum.

20 (102)oPERATION OF STATE PLANS

21 SEC. 1004. In the case of any State plan for aid to

22 the blind which has been approved by the Board, if the

23 Board, after reasonable notice and opportunity for hearing

24 to the State agency administeringor supervising the adminis­
25 tration of such plan, finds­
 77

1 (1) that the plan has been so changed as to im­

2 pose any residence or citizenship requirement prohibited

3 by section'1002 (b), or that in the administration of
4 the plan any such prohibited requirement is imposed,
5 with the knowledge of such State agency, in a substantial
6 number of cases; or
7 (2) that in the administration of the plan there

8 is a failure to comply substantially with any provision

9 requiredby section 1002 (a) to be included in the plan;
10 the Board shall notify such State agency that further pay­
11 ments will not be made to the State until the Board is satis­

12 fled that such prohibited requirement is no longer so imposed,

13 and that there is no longer any such failure to comply.
14 Until it is so satisfied it shall make no further certification
15 to the Secretary of the Treasury with respect to such State.

16 (103)ADMINIASTRATION

17 SEC. 1005. There is hereby authorized to be appropri­

18 ated for the fiscal year ending June 30, 1936, the sum of
19 $30,000, for all necessary expenses of the Board in adminis­

20 tering the provisions of this title.

21 (1 04)DEFINITION
22 SEC. 1,006. When used in this title the term " aid to

23 'the blind" means money payments to permanently blind

24 indmvidcals and money expended for locating blio persons,

25 for providing diagnoses of their&eye condition, and for

26 training and employment of the adult blind.
 78
1 (105)TITLE XI-INTDIAN PENSIONS
2 SECTION 1201. That heads of families and single per­

3 sons of Indian blood, not otherwise entitled to the benefit

4 of this Act, who have heretofore attained or shall hereafter
5 attain the age of sixty-five years, are hereby declared to be

6 entitled to a pension from the United States in the sum of

7 $30 per month, subject to the following conditions:

8 Applications for pension by persons of Indian blood

9 shall be made in writing in such form as the Secretary of
10 the Interior may prescribe and shall be filed by the appli­

11 cant with the superintendent or other officer in charge of

12 the agency or tribe to which the applicant belongs. Upon
13 receipt of any such application the Secretary of the Interior

14 shall make, or cause to be made, such investigation as he may

15 deem necessary to determine the accuracy of the f acts shown
16 thereon, including the annual income of the applicant from
17 other sources. In all cases where the Secretary of the In­
18 tenior finds that the annual income of such applicant is less
19 than $1 per day, said Secretary shall award to -such appli­

20 cant a pension in an amount which, when added to the other

21 annual income of such applicant, will bring such annual
22 income up to but not in excess of $1 per day: Provided,

23 however, That payments to Indian pensioners entitled here­

24 under shall be made in equal monthly installments from
25 the date of approval of application therefor by the Secretary
 79
Iof the Interior and in the discretion of said Secretary such
2 payments may be made direct to the individual beneficiaries,

3 or to other persons designatedby the Secretary of the Interior

4 providing care for any beneficiary under the provisions of this
5 Act: Providedfurther, That in the discretionof the Secretary

(3 of the Interiorsuch payments due any Indian beneficiary may

7 be handled in accordance with regulations governing indi­
8 vidual Indian money accounts and the Secretary of the

9 Interior is hereby authorized to prescribe such further rules

10 and regulations as may be necessary for carrying out the
I1 provisions of this section.
12 SEC. 1202. All persons of Indian blood who are per­
13 manently blind but less than 65 years of age, shall be

14 entitled to a pension from the United States in the sum of

15 $10 per month, and all persons of Indian blood, who have
16 for one year previous to the enactment of this Act been
17 unable to perform physical labor on account of being crippled
18 or otherwise disabled, shall be entitled to a pension from the
19 United States in the sum of $1.0 per month during such dis­
20 ability.
21 SEC. 1203. The Indians and Eskimos of Alaska shall

22 receive a pension under same conditions and in an amount

23 one-half that provided for Indians under this title.
24 SEc. 1204. There is hereby authorized to be appro­

205 priated annually, out of any money in the Treasury not

 80
1 otherwise appropriated, so much as may be necessary to
2 carry out the provisions of this Act, including necessary
3 expenses of administrationz.
4 TITLE (106)X XII-GENERAL PROVISIONS
5 DEFINITIONS

6 SECTION (107)4-0X4 1205. (a) When used in this

7 Act­
8 (1) The term "State" (except when used in
9 section 531) includes Alaska, Hawaii, and the District
10 of Columbia.
11 (2) The term "United States " when used in a
12 geographical sense means the States, Alaska, Hawaii,
13 and the District of Columbia.
14 (3) The term " person " means an individual, a
15 trust or estate, a partnership, or a corporation.
16 (4) The term " corporation " includes associa­
17 tions, joint-stock companies, and insurance companies.
18 (5) The term " shareholder " includes a member
19 in an association, joint-stock company, or insurance
20 company.
21 (6) The term " employee " includes an officer of
22 a corporation.
23 (b) The terms " includes " and "' including " when
24 used in a definition contained in this Act shall not be deemned
 81
1 to exclude other things otherwise within the meaning of the
2 term defined.
3 (c) Whenever under this Act or any Act of Congress,
4 or under the law of any State, an employer is required or
5 permitted to deduct any amount from the remuneration of
6 an employee and to pay the amount deducted to the United
7 States, a State, or any political subdivision thereof, then
8 for the purposes of this Act the amount so deducted shall
9 be considered to have been paid to the employee at the
10 time of such deduction.
11 (d) Nothing in this Act shall be construed as author­
12 izing any Federal (108)or State official, agent, or repre­
13 sentative, in carrying out any of the provisions of tbis Act,
14 to take charge of any child over the objection of either
15 of the parents of such child, or of the person standing in loco
16 parentis to such child(109) 7-­ if vk~ior of±t4he levw o44f
17 State.
18 RULES AND REGULATIONS

19 SEC. (110)4-00 1206. The Secretary of the Treasury,

20 the Secretary of Labor, and the Social Security Board,
21 respectively, shall make and publish such rules and regula­
22 tions, not inconsistent with this Act, as may be necessary
23 to the efficient administration of the functions with which
24 each is charged under this Act.
Hl.R. 7260 6
 82
1 SEPARABILITY

2 SEC. (1 11)4-009 1207. Ifany provision of this Act, or

3 the application thereof to any person or circumstance, is held
4 invalid, the remainder of the Act, and the application of
5 such provision to other persons or circumstances shall. not
6 be affected thereby.
7 RESERVATION OF POWER

8 SEC. (112)1004" 1208. The right to alter, amend, or

9 repeal any provision of this Act is hereby reserved to the
10 Congress.
11 SHORT TITLE

12 SEC. (113)4605 1209. This Act may be cited as the

13 "Social Security Act ".

Amend the title so as to read: "An Act to provide for

the general welfare by establishing a system of Federal
old-age benefits, and by enabling the several States to make
more adequate provision for agred persons, blind persons,
dependent and crippled children, maternal and child wel­
fare, public health, and the administration of their unemploy­
ment compensation laws; to establish a Social Security
Board; to raise revenue; and for other purposes."
Passed the House of Representatives April 19, 1935.
Attest: SOUTH TRIMBLE,
Clerk.
Passed the Senate with amendments May 13 (cal­
endar day, June 19), 1935.
Attest: EDWIN A. HALSEY,
Secretary.
 7ST 'osox} Ho R. 7260
AN ACT
To provide for the general welfare by establishing a
system of Federal old-age benefits, and by enabling
the several States to make more adequate provi­
sion for aged persons, dependent and crippled
children, maternal and child welfare, publlc
health, and the administration of their unem­
ployment compensation laws; to establish a Social
Security Board; to raise revenue; and for other
purposes.

IN THE H1OUSE oiF REPRiESENTATIVES

Ju~ic 20, 1935
Ordered to be printed with the amendments of the
Senate numbered
9780 CONGRESSIONAL RECORD-HOUSE JUNE 20

MECSSAGI FROM THR SENATZ

A message from the Senate. by Mr. Horne. its enrolling
clerk, announced that the Senate had passed with amend­
mnents. in which the concurrence of the House Is requested,
a bill of the House of the following title:
H. R. 7260. An act to provide for the general welfare by
establishing a system of Federal old-age benenits, and by
enabling the several States to make more adequate provision
for aged persons, blind persons. dependent and crippled chil­
dren, maternal and child welfare. public health, and the ad­
1935 CONGRESSIONAL RECORD--HOUSE 9781
Ministration of their unemployment compensation laws; to
establish a Soia Security Board; to raise revenue; and for
Other Purposes.
The message also announced that the Senate insists upon
its amendments to the foregoing bill, requests a conference
with the House thereon, and appoints Mr. HARRisoN, Mr.
KING. Mr. GEORGE, Mr. KEYES, and Mr. LA FOLLETTE to be
the Conferees on the part of the Senate.
9812 CONGRESSIONAL RECORD-HOUSE JUNE 20

SOCIAL-SECURITY BIL
Mr. DOUGHTON. Mr. Speaker. I ask unanimnous consent
to take from the Speaker's table the bill (E. R. 7260) to
provide for the general welfare by establishing a system of
Federal old-age benefits, and by enabling the several States
to make more adequate provision for aged persons, blind per­
sons, dependent and crippled children. maternal and child
1935 CONGRESSIONAL RECORD-HOUSE 9813
,welfare, Public health, and the administration of their unem­
ploYment compensation laws; to establish a Social Security
Board; to raise revenue: and for other purposes, with Senate
amendments thereto, disagree to the Senate amendments.
and agree to the conference ask~ed by the Senate.
The SPEAKER. Is there objection?
There was no objection.
The SPEAKER appointed the following conferees: Mr.
DOUGHTON, Mr. SAMUEL B. HILL, Mr. CULLEN, Mr. MtEADwAY.
and Mr. BACHARAGH.
1935 June 21a, 1935 CONGRESSIONAL RECORD-SENATE 9815

MESSAGE FROM THE HOUSE

The message also announced that the House had disagreed

to the amendments of the Senate to the bill (H. R. 7260) to
provide for the general welfare by establishing a system of
Federal old-age benefits, and by enabling the several States
to make more adequate provision for aged persons, blind
persons, dependent and crippled children, maternal and child
welfare, public health, and the administration of their unem­
ployment compensation laws; to establish a Social Security
Board; to raise revenue; and for other purposes; agreed to
the conference asked by the Senate on the disagreeing votes
of the two Houses thereon, and that Mr. DOUGHTON, Mr.
SAxuEL B. HrLL, Mr'. CULLEN, Mr. TREADWAY, and Mr. BACH­
ARACH were appointed managers on the part of the House at
the conference.
74TrH CONGRBSS HOUSE OF REPRESENTATIVEs RFPORT
18t Ses8ion No. 1540

SOCIAL SE~CURITY BILL

JULY 16, 1935.-Ordered to be printed

Mr. DOUGHTON, from the committee of conference, submitted thte

following

CONFERENCE REPORT
[To accompany H. R. 7260]

The committee of conference on the disagreeing votes of the two

Houses on the amendments of the Senate to tile bill (H. R. 7260) to
provide for the general welfare by establishing a system of Federal
old-age benefits, and by enabling the several States to make miore
adequate provision for aged persons, dependent and crippled children,
maternal and child welfare, public health, and thle administration of
their unemployment compensation laws; to establish a Social Security
Board; to raise revenue; and for other purposes, having met, after
full and free conference, have agreed to recommend and do recomn­
mend to their respective Houses as follows:
That the Senate recede from its amendments numbered 2, 'a, 6, 7,
8, 10, 11, 12, 13, 14, 15, 18, 22, 23, 24, 25, 26, 27, 2), '30, 31, 32, ~"3,
34, 35, 36, 37, 38, 40, 41, 42, 43, 44, 61, 65, 70, 75, 76, 77~,78, 79, 80,
81, 86, 90, 92, 105, and 108.
That the House recede from its disagreement to the amendments
of the Senate numbered 1, 5, 9, 16, 20, 21, 28, 39, 45, 46, 47, 48 49,
50, 51, 52, 53, 54, 55, 56, 57, 58, 6O, 62, 63, 64, 66, 69, 71, 72, 82, S8,
89, 93, 94, 95, 96, 97, 98, 102, 103, and 109, and agree to the same.
Amendment numberd 4:
That the House recede from its disagreement to the amendment of
the Senate numbered 4, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate aiyend-.
ment insert the following: :Provided, That the State plan, in order to
be approved by the Board, need not provide for financial participation4
before July 1, 1937, by the State, in the case of any State which the Board,.
upon application by the State and after reasonable notice and oppor­
tunity for hearing to the State, finds is prevented,byp its constitutionfrom
2 SOCIAL SECURITY BILL

providing such financial participation; and the Senate agree to the

Same.
Amendment numbered 19:
That the House recede from its disagreement to the amendment of
the Senate numbered 19, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert the following: or such other agencies as the Board may
approve; and the Seuate agree to the same.
Amendment numbered 59:
That the House recede from its disagreement to the amendment
of the Senate iiumbered 59, and agree to the same with an amend­
ment, as follow.s:
On page 8 of the Senate engrossed amendments strike out line 12
~nd insert in lieu thereof the following: welfare services (hereinafter
in this section referred to as "child-welfare services") -for the protection
aznd care of homeless, dependent, and neglected children, and children in
danger of becoming delinquent and a comma; and the Senate agree to
the same.
Amendment numbered 73:
That the House recede from its disagreement to the amendment
of the Senate numbered 73, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert the following: If the tax is not paid when due, there shall be
added as part of the tax interest (except in the case of adjustments made in
accordance with7 the provisions of sections 802 (b) and 805) at the rate of
one-half of 1 per centum per month from the date the tax became due
until paid.
And the Senate agree to the same.
Amendment numbered 74:
That the House recede from its disagreement to the amendment of
the Senate numbered 74, and agree to the same with an amendment,
as follows:
In lieit of the miatter proposed to be inserted by the Senate amend­
ment, insert the following: together with a statement of the additional
expenditures in the District of Columbia and elsewhere incurred by the
Post Office Department in performing the duties imposed upon said
Department by this Act, and the Secretary of the Treasury is hereby
authorized and'directed to advancefrom, time to time to the credit of the
Post Office Department Jrom appropriationsmade for the collection of
the taxes imposed by this title, such sums as may be required for such
additional expenditures incurred by the Post Offce Department; and the
Seniate, agree to the same.
Amendment numbered 85:
That the House recede from its disagreement to the amendment
of the Senate numbered 85, amid agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend-~
ment insert EIGHT; and the Senate agree to the same.
 SOCIAL SECURITY BILL 3
Amendment numbered 87:
That the House recede from its disagreement to the amendment
of the Senate numbered 87, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amnend­
ment insert the following: or such other agencies as the Board may
approve; and the Senate agree to the same.
Amendment numbered 91:
That the House recede from its disagreement to the amendment of
the Senate numbered 91, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert eight; and the Senate agree to the same.
Amendment numbered 99:
That the House recede from its disagreement to the amendment of
the Senate numbered 99, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert the following:

APPROPRIATION

SEcTION 1001. For the purpose of enabling each State to furnish

financial assistance, as far as practicable under the conditions in such
State, to needy individuals who are blind, there is hereby authorized to
be appropriatedfor the fiscal year ending June 30, 1936, the sum of
$3,000,000, and there is hereby authorized to be appropriatedfor each
_fiscal year therealter a sum sufficient to carry out the purposes of this
t'itle. The sums made availableunderthis section shall be uWedfor making
~payments to States which have submitted, and haid approved by the Soci~al
Security Board, State plansfor aid to the blind.
And the Senate agree to the same.
Amendment numbered 100.
That the House recede from its disagreement to the amendment of
the Senate numbered 100, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert the following:

STATE PLANS FOR. AID TO THE BLIND

SEc. 1002. (a) A State planfor aid to the blind must (1) provide that
it shall be in effect in all political subdivisions of the State, and, if ad­
ministered by them, be mandatory upon them; (2) provide for financial
participation by the State; (3) either provide for the establishment or
designation of a single State agency to administer the plan, or promde
for the establishment -or designation of a single State agency to superv'se
the administrationof the plan; (4) provide for grantingto any individual,
whose claim for aid is denied, an opportunityfor a fair hearing bejore
su?1ch State agency; (5) provide such methods of administration (other
than those relating to selection, tenure of ojjiee, and compensation of
4 SOCIAL SECURITY BILL

personnel) as are found by the Board to be necessaryj for the efficien*

operation of the plan; (6) provide that the State agency w~ill make such
reports, in suchform and containingsuch irnformation, as the Board may
from time to time require, and comply with such prorisionsas the Board
may from time to time find necessary to assur tecorrectness and yeri­
_fwation of such reports; and (7) provide that no aid will be furnished any
,individual under the plan with respect to any period with respect to
which he is receiving old-age assistance under dhe State plan approved
under section 2 of this Act.
(b) The Board shall approve any plan which fulfills the conditions
specified in subsection (a), except that it shall not approve any plan
which imposes, as a condition of eligibilityfor aid to the blind under the
plan­
(1) Any residence requirement which excludes any resident of the State
who has resided thereinfive years during the nine years immediately pre­
ceding the applicagionfor aid and has resided therein continuously for
one year immediately preceding the application; or
(2) Any citizenship requirement which excludes any citizen o~f the
United States.
And the Senate agree to tbe same.
Amendment numbered 101:
That the House recede from its disagreement to the amendment of
the Senate numbered 101, and agree to the same with the following
amendments:
On page 24 of the Senate engrossed amendments, line 19, strike out
"permanently"; and on page 25 of the Senate engrossed amendments,
line 16, strike out "permanently "; and the Senate agree to the same.
Amendment numbered 104:
That the House recede from its disagreement to the amendment of
the Senate numbered 104, and agree to ,the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert the following:
DEFINITION

SEc. 1006. When used in this title the term "aid to the blind" means
money payments to blind individuals.
And the Senate agree to the same.
Amendment numbered 106:
That the House recede from its disagreement to the amendment of
the Senate numbered 106, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert XI; and the Senate agree to the same.
Amendment numbered 107:
That the House recede from its disagreement to the amendment
of the Senate numbered 107, and agree to the same with an amend­
ment as follows:
in jNu of the matter proposed to be inserted by the Senate amend­
ment insert 1101; and the Senate agree to -the same.
 SOCIAL SECURITY BILL5

Amendment numbered 110:

That the House recede from its disagreement to the amendment of
the Senate numbered 110, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment, insert 1102; and the Senate agree to the same.
Amendment numbered 1ll:
That the House recede from its disagreement to the amendment of
the Senate numbered 111, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment, insert 1 103; and the Senate agree to the same.
Amendment numbered 112:
That the House recede from its disagreement to the amendment of
the Senate numbered 112, and agree to the same with an amendment,
as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert 1104; and the Senate agree to the same.
Amendment numbered 113:
That the Senate recede from its disagreement to the amendment
,of the Senate numbered 113, and agree to the same with an amend­
ment, as follows:
In lieu of the matter proposed to be inserted by the Senate amend­
ment insert 1105; and the Senate agree to the same.
That the House recede from its disagreement to the amendment
of the Senate to the title of the bill, and agree to the same.
The commiittee of conference have not agreed on the following
amendments: Amendments numbered 17, 67, 68, 83, and 84.
R. L. DOUGIHTON,
SAm B. HILL,
Tnos. H. CULLEN,
ALLEN T. TREADWAY,
ISAAO BACHARACH,
Managers on the part of the House.
PAT HARRISON,
WILLIAm H, KING,
WALTER F. GEORGE,
HENRY W. KEYES,
ROB3ERT M. LA FOLLETTE, Jr.,
Managers on the part of the Senate.
STATEMENT OF THE MANAGERS ON THE PART OF THE HOUSE
The managers on the part of the House at the conference on the
disagreeing votes of the two Houses on the amendments of the Senate
to the bill (Hw R. 7260) to provide for the general welfare by establish­
mng. a system of Federal old-age benefits, and by enabling the several
States to make more adequate provision for aged persons, dependent
and crippled children, maternal and child welfare, public health, n
the administration of their unemployment compensation laws; to
establish a Social Security Board; to raise revenue; and for other
purposes, submit the following statement in explanation of the effect
of the action agreed upon by the conferees and recommended in the
accopanying conference report:
Amendment no. 1: The House bill, with reference to the appro­
priation authorized for grants to States for old-age assistance, stated
that the appropriation was for the purpose of enabling each State to
furnish financial assistance assuring, as far as practicable under the
conditions in such State, a reasonable subsistence compatible with
decency and health to aged individuals without such subsistence.
The Senate amendment states that the appropriation is for the pur­
pose of enabling each State to furnish financial assistance, as far as
practicable under the conditions in such State, to aged needy indi­
viduals. The House recedes.
Amendments nos. 2 and 3: The House bill required the State plan
for old-age assistance to provide that if the State or any of its political
subdivisions collects from the estate of any recipient any amount with
respect to old-age assistance under the plan, one-half of the net
amount so collected shall be promptly paid to the United States.
The Senate amendments provide for the repayment to the United
*States in such cases, instead of one-half of the net amount so col­
lected, a portion of the net amount collected proportionate to the part
of the old-age assistance representing payments made by the United
States. The Senate recedes.
Amendment no. 4: This amendment provides that in order to
assist the aged of States who have no State system of old-age pensions,
until an opportunity is afforded the States to provide for a State plan,
the Secretary of the Treasury shall pay to each State for each quarter
until not later than July 1,1937, in lieu of the amounts payable under
the House bill which were to be matched by the States, an amount
sufficient to afford old-age assistance to each needy individual within
the State who at the time of such expenditure is 65 years of age or
older, and who is declared by such agency as may be designated by
the Social Security Board to be entitled to receive the same, old-age
assistance not in excess of $15 a month.
The House recedes with an amendment, in lieu of the Senate
amendment, which provides that the State plan for old-age assistance,
in order. to be approved by the Board, need not provide for financial
participation before July 1, 1937, by the State, in the case of any State
wbi#.,h ilie Board, upon application by the State and after reasonable
6
 SOCIAL SECURITY BILL 7
notice and opportunity for hearing to the State, finds is prevented hV
its constitution from providing such financial participation..
Amendment no. 5: The House bill provided that the Board, before
stopping payments to a State for old-age assistance on the ground
that the State plan is not being complied with, should give notice and
opportunity for hearing to the State agency. The Senate amend­
ment provides that the notice and opportunity for hearing must be
'reasonable.'' The House recedes.
Amendments nos. 6, 7, and 8: The House bill, with reference to
the "Old-age reserve account" for the payment of Federal old-age
benefits under title II, provided that the amount of authorized appro­
priations should be based upon such tables of mortality as the Secre­
tary of the Treasury should adopt; that the Secretary of the Treasury
should submit annually to the Bureau of the Budget an estimate of
the appropriations to be made to the account; and that he should
include in his annual report the actuarial status of the account. The
Senate amendments transfer these duties to the Social Security Board.
The Senate recedes.
Amendment no. 9: This amendment provides that for every month
during which the Board finds that an aged person, otherwise qualified
for Federal old-age benefits under title II, is regularly employed, after
he attains the age of 65, a month's benefit will be withheld from such
person, under regulations prescribed by the Board, by deductions
from one or more payments of old-age benefits to such person. The
House recedes.
Amendments nos. 10 and i1: The House bill excepted from t~he
term "employment", as used in title II relating to the payment of
Federal old-age benefits, service performed as an officer or member of
the crew of a vessel documented under the laws of the United States
or of any foreign country. The Senate amendments strike out this
exception and expressly include within the definition of "employ­
ment " service performed as an officer or member of the crew of a,vessel
documented under the laws of the United States. The Senate recedes.
Amendments nos. 12, 13, and 14: These amendments make changes
in paragraph numbers. The Senate recedes.
Amendment no. 15: The House bill in defining the term "employ­
ment", as used in title II relating to the payment of Federal old-age
benefits, excepted service performed in the employ of at corporation,
community chest, fund, or foundation, organized and operated ex­
clusively for religious, charitable, scientific, literary, or educational
purposes, no part of the net earnings of which inures to the benefit of
any private shareholder or individual. The Senate amendment adds
to the list of purposes "or hospital" as aclarifying amen-dment. The
Senate recedes, the conferees omitting this language ats surplusage,
based on the fact that the Internal Revenue Bureau lhas uniform~ly
construed language in the income-tax laws, identical with that found
in the H.1ouse bill, as exempting hospitals not operated for profit, and
also on the fear that the insertion of the words added by the Senate
amendment might interfere with the continuation of the long-con­
tinued construction of the income-tax law. C

Amendment no. 16: This amendment excepts from the definition

of "employment", as used in title II relating to the payment of
Federal old-age benefits, service performed in the employ of a cor­
poration, community chest, fund or foundation, organized and oper­
8 SOCIAL SECURITY BILL

ated exclusively for the prevention of cruelty to children or animals.

The House recedes.
Amendments nos. 18 and 19: The House bill provided that the
Social Security Board should not certify for payment to any State
under title III amounts for the administration of the State unem­
ployment insurance law unless such law provides for payment of
unemployment compensation solely through public employment
offices in the Sta~te. The Senate amendments require that the State
law nuist provide for payment of unemployment compensation
thro'ugh public employment offices in 'the State to the extent that such
offices exist aend are, designated by the State for the purpose. T'he
Senate recedes on amnendment no. 18 and the House recedes on amend-
Inent no. 19 with nn amendment changing the language of the amend­
ment. The efl~ect of the action of the conferees is to provide that the
State law cannot be approved by the Board unless it provides for
the payment of inemployment compensation solely through public
employment office.s in the State or such other agencies as the Board
may approve.
Amendment no. 20: The House bill provided that the Board, before
stopping payments to a State for grants for unemployment compensa­
tion administration on the ground that the State plan is not being
complied with, should give notice and opportunity for hearing to the
State agency. The Senate amendment provides that the notice and
opportunity for hearing must be "reasonable." The House recedes.
Amendment no. 21: The House bill, with reference to the appro­
priation authorized for grants to States for aid to dependent. children,
stated that the appr'opriation was for the purpose of enabling each
State to furnish financial assistance assuring, as far as practicable
under the conditions in such State, a reasonable subsistence compati­
ble with decency and health to denendent children without such sub­
sistence. The Senate amendment .tates that the appropriation is for
the purpose of enabling each State to furnish financial assistance, as
far as practicable under the conditions in such State, to needy de­
pendent children. The House rec~edes.
Amendments nos. 22 to 27, 29 to 38, and 40 to 44: The House bill
placed the administration of title IV, relating to grants to States for
aid to dependent children, in the Social Security Board. The Senate
amendments transfer these functions in part to the Secretary of Labor
and in part to the Chief of the Children's Bureau, and make clerical
changes to earry out this 1yolicy. The Senate recedes.
Amendment no. 28: The House bill in title IV, relating to grants
to States for aid to dependent children, provided that no State plan
should be approved[ which-iniposes as a condition for eligibility for
aid to dependent children a residence requirement which denies aid
to any child residing in the State who was born in the State within
1 year immediately p~receding the application. The Senate amend­
mnent permits the State plan to deny aid to such a child if its mother
has~ not resided in the State for 1 year immediately preceding the
birth. The House recedes.
Ani~endment no. 39: The House bill provided that the Board, before
stopping payments to a9State for aid to dependent children on the
ground that the Stat~e plan is not being complied with, should give
notice and opportunity for hearing to the State agency. The Senate
 SOCIAL SECURITY BILL 9
amendment provides that the notice and opportunity for hearing must
be "reasonable." The House recedes.
Amendment no. 45: This amendment adds to the definition of a
"dependent child " for the purposes of title IV, giving aid to dependent
children, a requirement that the child must have been deprived of
parental support or care by reason of the death, continued absence
from the home, or physic~al or mental incapacity of a parent. The
House recedes.
Amendment no.46: The House bill in defining the term "dependent
-child" for the purposes of title IV, relating to grants to States for aid
*to dependent children, contained a requirement that the child must
be living in a "residence" maintained by one or more of certain rela­
*tives as his or their own home. The Senate amendment clarifies the
meaning of the word "'residence" by making it certain that it is not
~confined to a separately maintained house but refers to any place of
abode, whether a separate house, an apartment, a room, a house-boat,
:or other place of abode. The House recedes.
Amendments nos. 47 and 48: Under the House bill the allotments
*to each State from appropriations made for maternal and child health
services were made on the basis of the live births in such State as
compared with the total number of live births in the United States.
The Senate amendments provide that the proration shall be made on
the basis of figures for the latest calendar year for which the Bureau
*of the Census has available statistics. The House recedes.
Amendment no. 49: This is a clarifying amendment. The House
recedes.
Amendment no. 50: The House bill provided that the methods of
aidministration required in the State plan for maternal and child
health services should be such as are "found by the Chief of the
Children's Bureau to be" necessary for the efficient operation of the
plan. The Senate amendment strikes out the matter above quoted
so that the final judgment as to what methods are necessary in the
State rests with the courts rather than with the Chief of the Children's
Bureau. The House recedes.
Amendment no. 51: This is a clarifying amendment. The House
recedes.
Amendment no. 52: This amendment requires the report filed by
the State with respect to estimated expenditures for maternal and
child health services to include amounts appropriated or made avail­
able by political subdivisions of the State. The House bill required
,only amounts appropriated or made available by the State. The
House recedes.
Amendment no. 53: The House bill provided that the Secretary of
Labor, before stopping payments to a State for maternal and child
health services on the ground that the State plan is not being com­
plied with, should giv notice and opportunity for hearing to the
State agency. The Senate amendment provides that the notice and
opportunity for hearing must be "reasonable". The House recedes.
Amendment no. 54: This is a clarifying amendment. The House
recedes.
Amendment no. 55: The House bill provided that the methods of
administration required in the State plan for services -to cipe
children should be such as are "found by the Chief of the Chide'
10 ROCIAL SECURITY BnlL

Bureau to be" necessary for the efficient operation of the plan. The
Senate amendment strikes out the matter above quoted so that the
final judgment as to what methods are necessary in the State rests
with the courts rather than with the Chief of the Children's Bureau.
The House recedes.
Amendment no. 56: This is a clarifying amendment. The House
recedes.
Amendment no. 57: This amendment requires the report filed by
the State with respect to estimated expenditures for services to
crippled children to include amounts appropriated or made available
by political subdivisions of the State. The House bill required only
amounts appropriated or made available by the State. The House
recedes.'
Amendment no. 58: The House bill provided that the Secretary of
Labor, before stopping payments to a State for services to crippled
children on the ground that the State plan is not being complied with,
should give notice and opportunity for hearing to the State agency
The Senate amendment provides that the notice and opportunity
for hearing must be "reasonable." The House recedes.
Amendments nos. 59 and 60: The House bill authorized an appro­
priation of $1,500,000 and rovided that the money so appropriated
should be allotted among tJe States, for payment of part of the cost
of county and local child-welfare services in rural areas. The purpose
of the section was stated to be the cooperation with State public-
welfare agencies in establishing, extending, and strengthening, in
rural areas, public-welfare services for four types of children: Home­
less, neglected, dependent, and those in danger of becoming delin­
quent. Senate amendment no. 59, besides clarifying the language of
the House bill, provided that in making allotments there should be
taken into consideration plans developed both by the State welfare
agency and the Children's Bureau. The areas in which child-welfare
services were to be encouraged were extended from "rural areas" to
those "predominantly rural ", and "other areas in special need"
were included in the work of developing the work of State services
for encouraging adequate support of child-welfare organizations.
The classes of children to be aided, however, were limited to those
who were homeless or neglected. Amendment no. 60 prescribes the
method of making payments. The House recedes on amendment
no. 60, and recedes on amendment no. 59, with an amendment, to
the effect that the classes of children to be cared for will include
children who are homeless, dependent, neglected, or in danger of
becomin delinquent.
Amendment no. 61: The House bill authorized additional appro­
priations for the administration of the Vocational'Rehabilitation Act
of June 2, 1920, as amended by the "Federal agency authorized to
administer it." The Senate amendment provides that the author­
ized appropriation should be for the administration of such act by
the Office of Education in the Department of the Interior. The Sen­
ate recedes.
Amendments nos. 62, 63, and 64: These are clarifying amendments.
The House recedes.
 SOCIAL SECURITY BILL 11.

Amendment no. 65: The House bill established a Social Security

Board for the administration of certain portions of the act. Tbis
amendment provides that the Board shall be established in the De­
partment of Labor. The Senate recedes.
Amendment no. 66: This amendment provides that no member of
the Social Security Board during his term shall engage in any other
business, vocation, or employment, and also that not more than two
of the members of the Board shall be members of the same political
party. The House recedes.
Amendment no. 69: This amendment provides that appointments
of attorneys and experts by the Social Security Board may be made
without regard to the civil-service laws. The House recedes.
Amendment no. 70: This amendment provides that the report of
the Social Security Board to Congress, required by the House bill,
shall be made through the Secretary of Labor. The, Senate recedes.
Amendments nos. 71 and 72: The House bill provided that if more
or less than the correct amount of tax under title VIII is paid with
respect to any wage payment, then proper adjustments should be
made in connection with subsequent wage payments to the same
individual by the same employer. The Senate amendments provide
that such adjustments shall be made without interest. The House
recedes.
Amendment no. 73: This amendment provides that if the tax
imposed by title VIII is not paid when due there shall be added as
dart of the tax interest at the rate of one-half of 1 percent per month
from the date the tax became due until paid. Under the House bill
the rate was one percent a month. The House recedes with an
amendment correcting a clerical error.
Amendment no. 74: This amendment provides that the Postmaster-
General shall each month send a statement to the Treasury of the%
-additional expenditures incurred by the Post Office Department in
carrying out its duties under this act, and that the Secretary of the
Treasury shall be directed to advance from time to time to the credit
of the Post Office Department, "from appropriations made for the
collection and payment of taxes provided under section 707 of this.
title", such amounts as may be required for additional expenditures
incurred by the Post Office Department in the performance of the
duties and functions required of the Postal Service by the act. The
House recedes with clarifying amendments.
Amendments nos. 75 and 77: The House bill excepted from the
term "employment", as used in title VIII imposing certain excise
taxes, service performed as an officer or member of the crew of a.
vessel documented under the laws of the United States or of any
foreign country. The Senate amendments strike out this exception
and expressly include within the definition of "employment" service
performed as an officer or member of the crew of a vessel documented
under the laws of the United States. The Senate recedes.
Amendment no. 76: The House bill excepted from the term "eni­
ployment", as used in title VIII relating to certain excise taxes,,
service performed by an individual who has attained the age of 615.
The Senate amendment strikes out this exception. The Senate
recedes.
12 SOCIAL SECURITY BILL

Amendmnents nos. 78, 79, and 80: These are amendments to para­
graph numbers. The Senate recedes.
Amendment no. 81: The House bill in defining the term "employ­
ment", as used in title VIII imposing certain excise taxes, excepted
service performed in the employ of a corporation, community chest,
fund, or foundation, organized and operated exclusively for religious,
charitable, scientific, literary, or educational purposes, no part of the
net earnings of which inures to the benefit of any private shareholder
or individual. The Senate amendment adds to the list of purposes
"or hospitil" r~s a clarifying amendment. The Senate recedes in
conformity with the aiction on amendment no. 15.
Amendment no. 82: This amendment excepts from the definition
of "temployment", as used in title VIII relating to certain excise taxes,
service performed in the employ of a corporation, community chest,
fund or foundation, organized and operated exclusively for the
prevention of cruelty to children or animals. The House recedes.
Amendment no. 85: This is a change in a title heading. The
House recedes with an amendment to conform to the action on
amendment no. 91.
Amendments nos. 86 and 87: The House bill provided as one of
the conditions for the approval of a State law for unemployment
,compensation that the law must provide that all compensation is to
be paid through public employment offices in the State. The Senate
amendment changes this requirement so that compensation must be
paid through public employment offices in the State to the extent
that such offices exist and are designated by the State for the purpose.
The Senate recedes on amendment no. 86 and the House recedes on
amendment no. 87 with an amendment changing the language of the
amendment. The effect of the action of the conferees is to provide
that the Board shall not approve any State law unless the law provides
that all compensation is to be paid through public employment
-offices in the State or such other agencies as the Board may approve.
Amendment no. 88: The House bill provided that the Social Security
Board shall certify each State whose unemployment compensation law
is approved, except that it shall not certify any State which, after
notice and opportunity for hearing to the State agency, the Board
finds has changed its law so that it no longer contains the provisions
:specified in the bill or has failed substantially to comply with such
provisions. The Senate amendment provides that the notice and
opportunity for hearing must be "reasonable." The House recedes.
Amendment no. 89: This amendment provides that if the excise
tax imposed by title IX is not paid when due there shall be added
as part of the tax interest at the rate of one-half of 1 percent per
month from the date the tax became due until paid. Under the
House bill the rate of interest was 1 percent per month. The House
recedes.
Amendments nos. 90 and 91: The House bill provided that the
term "employment", as used in title IX, should not include a~ny
person unless on each of some 20 days during the taxable year, each
day being in a different calendar week, the total number of individ­
uals who were in his employ for some portion of the day (whether or
not at the same moment of time) was 10 or more. The Senate
 SOCIAL SECURITY BILL 13
amendments reduce the number of days from 20 to 13, and the num­
ber of individuals from 10 to 4. The Senate recedes on amendment
numbered 90, and the House recedes on amendment numbered 91 with
an amendment fixing the number of individuals at eight.
Amendment no. 92: The House bill in defining the term "employ­
ment", as used in ,title IX relating to certain excise taxes, excepted
service performed in the employ of a corporation, community chest,
fund, or foundation, organized and operated exclusively for religious,
charitable, scientific, literary, or educational purposes, no part of the
net earnings of which inures to the benefit or any private shareholder
or individual. The Senate amendment adds to the list of purposes
"or hospital" as a clarifying amendment. The Senate recedes in
conformity with the action on amendment no. 15.
Amendment no. 93: This amendment excepts from the definition
of " employment" as used in title IX, imposing certain excise taxes,
service performed in the employ of a corporation, community chest,
fund, or foundation, organized and operated exclusively for the pre­
vention of cruelty to children or animals. The House recedes.
Amendment no. 94: Under the House bill in title IX providing for
a tax on employers with a credit against the tax of contributions paid
into an employment fund under a State law, the term "unemploy­
ment fund " was defined as a fund, "all the assets of which are mingled
and undivided and in which no separate account is maintained with
respect to any person"~; in other words, requiring a "pooled" fund.
The Senate amendment strikes out this requirement leaving it to the
State to define the character of its special fund. The House recedes.
Amendment no. 95: This is a clerical amendment. The House
recedes.
Amendments nos. 96 and 97: Amendment no. 96 provides that a
taxpayer under section 901 (unemployment excise tax) may, for
1938, or any taxable year thereafter, obtain an additional credit
against his tax, under certain conditions. A taxpayer carrying on
business in a State will credit against the tax the amount of his con­
tributions under the law of that State; and, under this new section,
he will also credit the amount by which his contributions are less
than they would have been if he had been contributing at the maxi­
mum rate in the State. The additional credit, however, is limited by
not allowing it to exceed the difference between the actual amount
paid and the amount he would have paid at a 2.7 percent rate; and
the amendme~nt also provides for limiting the additional credit to the
proper difference allowed by the State law, diminishing it if the em­
ployer has failed to make any of the contributions required of him.
In figuring what contributions the employer would have paid at the
maximum rate, the highest rate applicable to any employer each
time when contributions are payable is the rate considered. The
amendment also provides that even if an employer is getting credit
under section 902 and additional credit under this section, he shall
never credit against tax more than 90 percent of the tax.
Amendment no. 97 places restrictions on the allowance of the addi­
tional credit.
(1) A taxpayer who has been contributing to a pooled fund and is
allowed a lower rate than that imposed on other employers in the
14 SOCIAL SECURITY BILL

State will get the additional credit only if he has had 3 years' compen­
sation experience under the State law, and only if the lower rate is
fixed as a result of bis comparatively favorable experience.
(2) The taxpayer may have guaranteed the employment of his em­
ployees, and be contributing to a guaranteed employmen t account
maintained by the State agency. In this case, if he claimed the addi­
tional credit under section 909, he would get it only if his guaranty
had been fulfilled, and only if his guaranteed emp oyment account
amounted to at least 7% percent of his guaranteed pay roll.
(3) The taxpayer may be contributing to a separate reserve account
from which benefits are payable only to his employees. If he claims
the additional credit under section 909, it would be allowed only if,
in the preceding year, those of his employees who became unemployed
and were eligible for compensation received compensation from the
reserve account. Furthermore, the additional credit would be allowed
only if the reserve account amounted to 7% percent of his pay roll, and
was at least five times larger than the amount paid out from it, in
compensation, in that year (among the 3 preceding years) when the
greatest amount was thus paid out from it.
The amendment also defines terms used in this section:
(1) "Reserve account" is defined as a separate account in a State
unemployment fund, from which compensation is payable only to the
former employees of the employers contributing to the account. The
account may be maintained with respect to one employer or a group of
employers.
(2) ''Pooled fund " is an unemployment fund (or part of such a fund,
if some employers are maintaining separate accounts in the fund) in
which all contributions are mingled and undivided. Compensation is
payable from it regardless of whether the claimant was formerly in the
employ of an employer contributing to the pooled fund; but where
some employers in the State have reserve accounts, their former em­
ployees get compensation from the pooled fund only if the reserve
accounts are exhausted.
(3) "Guaranteed employment account" is, like a reserve account,
a eparate account in an unemployment fund, but it can be main­
tained only with respect to certain employers. Compensation is
payable from it to those of such employer's employees who, having
been guaranteed employment, nevertheless become unemployed due
to a failure to fulfill the guaranty, or become unemployed at the end
of the year for which the guaranty was made, due to the nonrenewal
of the guaranty. To be a "guaranteed employment account", such
separate account would have to be maintained with respect to an
employer who had guaranteed the wages of all of his employees (or,
if he maintains more than 1 distinct business establishment, of all
the employees in at, least 1 such establishment), for at least 40 weeks
in a 12-month period. The wages guaranteed should be for at least
30 hours a week; but if 41 weeks, for instance, were guaranteed in­
stead of 40, the weekly hours guaranteed.could be cut from 30 to 29;
and if 42 weeks were guaranteed, only 28 hours' wages per week would
need to be guaranteed. While ordinarily all the employees would
have to be covered, the employer would not have to extend the guar­
anty to any new employ~e until the latter had served a probationary
period of not more than 12 consecutive weeks.
 SOCIAL SECUJRITY BILL 15
(4) "Year of compensation experience", used only in relation to an
employer, is defined as any calendar year during, which, at all times
in the year, a~former employee of such employer, if there was one who
was eligible for compensation, could receive compensation under the
State law.
Amendments nos. 98 to 104: These amendments insert a new
title. to provide for grants to States for aid to the blind, authorizing
$3,000,000 for the fiscal year ending June 30, 1936, and thereafter a
sum sufficient to carry out the title. Aid to the blind is defined as
money payments to permanently blind individuals and money ex­
pended for locating blind persons, for providing diagnoses of their
eye condition, and for training'and employment of the adult blind.
The payments are to be made on an equal matching basis, the ma­
.chinery for the payments being modeled on the provisions of title I
relating to old-age assistance. The administration of the title is
placed in the Social Security Board. The State plan in order to be
approved must, in addition to similar requirements as in the case of
title I, provide that no aid will be furnished an individual with
respect to any period with respect to which he is receiving old-age
assistance under a State plan approved under title I. The State
plan must also provide that money payments to a permanently blind
:individual will be granted in direct proportion to his need and the
plan must also contain definitions of "blindness" and "needy indi­
viduals" which meet the approval of the Board. There is no age
requirement and the Federal contribution in the case of any individual
is not to exceed $15 a month. The House recedes on this new title
with amendments striking out the provisions relating to the expendi­
ture of moneys for locating blind persons, for providing diagnoses of
their eye condition, and for training and employment of the adult
blind; providing for money payments to blind persons in lieu of
persons who are "permanently" blind; and omitting the require­
ments that the State plan must provide that money payments will be
g0ranted in direct proportion to the need of the individual and that
the plan must contain definitions of "blindness" and "needy indi­
viduals."
Amendment no. 105: This amendment provides pensions for heads
of families and single persons of Indian blood over 65 years of age,
payable from the Federal Treasury. The pension is $30 a month,
ieduced in the amount of the annual income. The amendment also
provides for a pension of $10 a month for persons of Indian blood
under 65 years of age but permanently blind, and also a pension of
$10 a month for persons of Indian blood crippled or otherwise dis­
abled. Indians and Eskimos of Alaska are to receive pensions in
one-half the amounts above provided. The Senate recedes.
Amendments nos. 106, 107, 110, 111, 112, and 113: These amend­
ments make changes in title and section numbers. The House
recedes with the necessary amendments.
Amendments nos. 108 and 109: The House bill provided that
nothing in the act should be construed as authorizing any Federal
official, in carrying out any provision of the act, to take charge of a
child over the objection of either parent, or of the person standing
in loco parentis to the child, "in violation of the law of a State."
Senate amendment numbered 108 added State officials to the officials
16 SOCIAL SECURITY BILL

affected by the amendment and Senate amendment numbered 109

struck out the language above quoted "in violation of the law of a
State." The Senate recedes on amendment numbered 108 and th
House recedes on amendment numbered 109.
The House recedes from its disagreement to the amendment of the
Senate to the title of the bill.
On amendments nos. 17, 67, 68, 83, and 84 (dealing with the exemp­
tion of private pension plans in titles II and VIII) the conferees are
unable to agree.R.LDUGTN
SAm B. HILL,
T~os. H. CULLEN,
ALLEN T. TREADWAY,
ISAAc BACHARACH,
Manager8 on the part qJ the Howe..
0
11258 CONGRESSIONAL RECORD-HOUSE 1935 JULY 16

CON'FrENCEC REPORT OF SOCIAL-SECURITY BILL

Mr. DOUGHTON. Mr. Speaker, I ask unanimous consent
that I may have until midnight tonight to Mie a confer­
ence report on H. R. 7260. the social-security bill.
The SPEAKER. Is there objection?
There was no objection.
11320 CONGRESSIONAL RECORD-HOUSIE JULY 17
71, 72, 82, 88. 89. 93. 94. 95, 98, 97, 98. 102, 103. and 109. and
agree to the same.
Amendment numbered 4: That the House recede from Its dis­
agreement to the amendment of the Senate numbered 4. and
agree to the same with an amendment, as follows: In lieu of the
matter proposed to be Inserted by the Senate amendment Insert
the following: "1: Ptovided, That the State plan, in order to be
approved by the Board, need not provide for financial participa­
tion before July 1, 1937, by the State. In the case of any State
which the Board, upon application by the State and after reason­
able notice and opportunity for hearing to the State, finds to
prevented by Its constitution from providing such financial par­
ticipation "1: and the Senate agree to the same.
Amendment numbered 19: That the House recede from Its dis­
agreement to the amendment of the Senate numbered 19. and agree
to the same with an amendment as follows: In lieu of the matter.
proposed to be inserted by the Senate amendment insert the fol­
lowing: " or such other agencies as the Board may approve "; and
the Senate agree to the same.
Amendment numbered 59: Thnt the Rouse recede from Its dis­
agreement to the amendment of the Senate numbered 59. and agree
to the same vwith an amendment as follows: On page 8 of the Senate
engrossed amendments strike out line 12 and Insert in lieu thereof
the following: " welfare serviccs (hereinafter in this section referred
to as I'child-welfare services') for the protection and care of home­
less, dependent, and neglected children, and children In danger of
becoming delinquent " and a comma; and the Senate agree to the
same.
Amendment numbered 73: That tha Rouse recede from Its dis­
agreement to the amendment of the Senate numbered 73. and agree
to the same with an amendment as follows: In lieu of the matter
proposed to be Inserted by the Senate amendment Insert the fol­
SOCIAL SECURITY BILL lowing: " If the tax is not paid when due, there shall be added as
part of the tax Interest (except in the case of adjustments made in-
Mr. DOUGHTON. Mr. Speaker, I call up the conference accordance with the provisions of sections 802 (b) and 505) at the
report upon the bill (H. R. 7260) to provide for the general rate of one-hailf of 1 per centum per month from the date the tax
welfare by establishing a system of Federal old-age benefits, became due until paid." and the Senate agree to the same.
Amendment numbered 74: That the House recede from Its dis..
and by enabling the several States to make more adequate agreement to the amendment of the Senate numbered 74, and
provision for aged persons, dependent and crippled children, agree to the same with an amendment as follows: In lieu of the
maternal and child welfare, public health, and the admin- matter proposed to be Inserted by the Senate amendment Insert
istration of their unemployment compensation laws; to es the following: " together with a statement of the additional ex­
penditures In the District of Columbia and elsewhere incurred by
tablish a social security board; to raise revenue; and for the Post Office Department in performing the duties imposed upon
other purposes, and ask unanimous consent that the state- said Department by this act, and the Secretary of the Treasury
ment be read in lieu of the report. is hereby authorized and directed to advance from time to time
to the credit of the Post Office Department from appropriations
The SPEAKER, The gentleman from North Carolina calls made for the collection of the taxes imposed by this title, such
up the conference report upon th~e bill 7260, and asks unani- sums as masy be required for such additional expenditures Incurred
mous consent that the statement be read in lieu of the by the Post Office Department "; and the Senate agree to the same.
Is tere bjecionAmendment numbered 86: That the House recede from its dis-
report. Ithrobeinagreement to the amendment of the Senate numbered 83, and
Mr. NICHOLS. Mr. Speaker, I reserve the right to object. agree to the same with an amendment as follows: In lieu of the
is this the conference report that has to do with the social matter proposed to be inserted by the Senate amendment Insert
security bill? th olwng"IH , and the Senate agree to the same.
The PEAER.TheChar soundrstndsIt.Amendment numbered 87: That the House recede from Its din-
The PEAER.TheChar soundrstndsit.greement to the amendment of the Senate numbered 87, and
Mr. NICHOLS. Then I desire to propound a parliamentary 'agree to the same with an amendment as follows: In lieu of the
inquiry. Will the reading of the statement, rather than the matter proposed to be Inserted by the Senate amendment insert
reading of the report, preclude Members from having an the following: "-or such other agencies as the Board may approve "
oppotunty
or he o vtepprvalor isaproal nd o ad the Senat -agree to the same.
or he
oppotunty o vtepproal r dsaprovl ad t anAmendment numbered 91: That the House recede from Its die-
be heard upon the report of the conferees? agreement to the amendment of the Senate numbered 91, and agree
The SPEAKER. Not at all. As to the reading of the to the same with an amendment as follows: In lieu of the matter
statement, it is up to the House to adopt the report, the proposed to be inserted by the Senate amendment Insert the follow-
timefordebae
bingIn cntrl o thegenlemn frm NrthIng: "eight"; and the Senate agree to the same.
timefordebae
cntrl bingin
o thegenlemn frm Nrth Amendment numbered 99: That the House recede from Its dis­
Carolina. agreement to the amendment of the Senate numbered 99, and agree
Mr. NICHOLS. I am just a little green on the parlia- to the same with an amendment as follows: In lieu of the matter
mentary procedure, and I wanted to know that this Would proposed to be inserted by the Senate amendment Insert the
not foreclose the House on any rights in considering the following: 'PpaopRATanOIe
conference report. -- SECTox 1001. For the purpose of enabling each State to furnish
The SPEAKER. Not at all. Is there objection? financial assistance, as far as practicable under the conditions hi
There was no objection, and the Clerk read the statement, such State, to needy individuals who are blind, there Is hereby
Thecofeene
eprtan satmet reasfolos' authorized to be appropriated for the fiscal year ending June. 30
The onfrene
reortandstatmen ar as ollws: 1936, the sum of $3,000,000. and there is hereby authorized to be
coMPEsxeNCe wZORT appropriated for each
out the purposes fiscal
of this yearThe
title. thereafter a sum
sums made sufficient
available to carry
under this
The committee of conference on the disagreeing votes of the section shall be used for making payments to States which have
two Houses on the amendments of the Senate to the bill (H. R. submitted, and had approved by the Social Security Board, State
7260) to provide for the general welfare by establishing a system plans for aid to the blind."
of Federal old-age benefits, and by enabling the several States to And the Senate agee to the same.
make more adequate provision for aged persons, dependent and Amendment numbered 100: That the House recede from Its dis­
crippled children, maternal and child welfare, public health, and agreement to the amendment of the Senate numbered 100. and agree
the administration of their unemployment-comperisatlon laws: .to to the same with an amendment as follows: In lieu of the matter
establish a Social Security Board; to raise revenue; and for other proposed to be inserted by the Senate amendment Insert the
purposes, having met, after full and free conference, have agreed foliowing: TT LN 03~ oTxBJ5
to recommend and do recommend to their respective Houses as- TTPLNMRADOTI MV
follows: I Sze. 1oo2. (a) A State plan for aid to the blind must (1) pro­
That the Senate recede from Its amendments numbered 2, 3, vide that it shall be in effect in aMl political subdivisions Of the
6, 7, S. 10. 11, 12, 13. 14, 15. 18, 22, 23, 24, 25, 26, 27, 29, 30, 31. State, and, if administered by them, be mandatory upon them; (2)
32, 33, 34, 35. 36. 37. 38. 40, 41. 42, 43, 44, 61, 65. 70, 75. 76, 77, provide for financial participation by the State; (3) either provide
78, 79, 80. 81. 86, 90, 92. 105, and 108. for the establishment or designation of a single State agency to
That the House recede from Its disagreement tbo the amend- administer the plan, or provide for the establishment or designs­
meats of the Senate numbered 2, 5, 9, 18, 20, 21, 28, 39, 45, 46, tion of a single State agency to supervise the administration of
47, 48. 49, 50, 51, 52. 53. 54. 55, 56, 57, 58. 60. 62, 63. 64, 66, 69, the plan; (4) provide for granting to any Individusal whoem Clah
1935 CONGRESSIONAL RECORD-HOUSE 11321
for akid Is denied, an opportunity for a fair hearing before such~ employment compensation laws: to establish a Social Security
State agency; (5) provide such methods of administration (other IBoard; to raise revenue; and for other purposes, submit the fol­
than those relating to selection, tenture of office, and compensation Ilowing statement In explanation of the effect of the action agreed
Of personnel) as are found by the Board to be necessary for the upon by the conferees and recommended In the accompanying
efficient Operation of the plan; (6) provide that the State agency conference report:
will make such reports, in such form and containing such informa- On amendment no. 1: The House bill, with reference to the ap­
tion, as the Board may from time to time require, and comply with -propriation authorized for grants to States for old-age assistance,
such Provisions as the Board may from time to time find neces- stated that the appropriation was for the purpose of enabling
sarY to assure the correctness and verification of such reports; and each State to furnish financial assistance assuring, as far as prac­
(7) Provide that no aid will be furnished any Individual under ticable under the conditions In such State, a reasonable sub­
the Plan with respect to any period with respect to which he Is sistence compatible with decency and health to aged individuals
receiving old-age assistance under the State plan approved under without such subsistence. The Senate amendment states that
section 2 of this Act. the appropriation Is for the purpose of enabling each State to
`(b) The Board shall approve any plan which fulfills the condi- furnish financial assistance, as far as practicable under the con­
tiOns specified in subsection (a). except that it shall not approve ditions In such Stats, to aged needy individuals. The House
any Plan which imposes, as a condition of eligibility for aid to the recedes.
blind under the plan- On amendments non. 2 and 3: The House bill required the
"(1) Any residence requirement which excludes any resident of State plan for old-age assistance to provide that If the State or
the State who has resided therein five years during the nine years any of its political subdivisions collects from the estate of any
immediately preceding the application for aid and has resided recipient any amount with respect to old-age assistance under
therein continuously for one year Immediately preceding the appli- the plan. one-half of the net amount so collected shall be
cation; or promptly paid to the United States. The Senate amendments
"(2) Any citizenship requirement which excludes any citizen of provide for the repayment to the United States in such cases.
the United Stte. Instead of one-half of the net amount so collected, a portion of
And the Senate agree to the same, the net amount collected proportionate to the part of the old-age
Amendment numbered 101: That the House recede from Its din- assistance representing payments made by the United States.
agreement to the amendment of the Senate numbered 101, and The Senate recedes.
agree to the same with the following amendments: On page 24 of On amendment no. 4: This amendment provides that In order
the Senate engrossed amendments, line 19, strike out "perma- to assist the aged of States, who have no State system of old-
nently ". and on page 25 of the Senate engrossed amendments, age pensions, until an opportunity is afforded the States to pro­
line 16, strike out "permanently "; and the Senate agree to the vide for a State plan, the Secretary of the Treasury shall pay to
same. each State for each quarter until not later than July 1. 1937, In
Amendment numbered 104: That the House recede from Its din- lieu of the amounts payable under the House bill which were to
agreement to the amendment of the Senate numbered 104. and he matched by the States, an amount sufficient to afford old-age
agree to the same with an amendment as follows: In lieu of the assistance to each needy indivIaual within the State who at the
matter Proposed to be Inserted by the Senate amendment insert time Of such expenditure Is 65 years of age or older, and who Is
the following: declared by such agency as may be designated by the Socisl
I D~XnXTION Security Board to be entitled to receive the same, old-age assist­
-SEm. 1006. When used In this title the term aid to the blind"I anceThenot in excess
House of *15
recedes witha month.
an amendment. in lieu of the Senate
means money payments to blind Individuals." amendment, which provides that the State plan for old-age assist­
And the Senate agree to the same. ance, In order to be approved by the Board, need not provide for
Amendment numbered 106: That the House recede from Its dis- financial participation before July 1, 1937, by the State, in the
agreement to the amendment of the Senate numbered 106. and case of any State which the Board, upon application by the State
agree to the same with an amendment as follows: In lieu of the and after reasonable notice and opportunity for hearing to the
matter proposed to be inserted by the Senate amendment Insert State. finds Is prevented by Its constitution from providing such
the following: 11XI "; and the Senate agree to the same, financial participation,
Amendment numbered 107: That the House recede from its din- On amendment no. 5: The House bill provided that the Board.
agreement to the amendment of the Senate numbered 107. and before stopping payments to a State for old-age assistance on the
agree to the same with an amendment as follows: In lieu of the ground that the State plan is not being compled with, should
matter proposed to be Inserted by the Senate amendment Insert give notice and opportunity for hearing to the State agency. The
the following: "11101 "1; and the Senate agree to the same. Senate amendment provides that the notice and opportunity for
Amendment numbered 110: That the House recede from Its din-; hearing must be "reasonable."~ The House recedes.
agreement to the amendment of the Senate numbered 110. and On amendments non. 6, 7. and 8: The House bill, with reference
agree to the same with an amendment as follows: In lieu of the to the "Old-age reserve account " for the payment of Federal old­
matter proposed to be Inserted by the Senate amendment Insert aebnft ne il I rvddta h muto uhr
the following: " 1102 ": and the Senate agree to the same,.g eeisudrtteU rvddta h muto uhr
Amendment numbered III: That the House recede from Its dis- lzed appropriations should be based upon such tables of mortality
agreement to the amendment of the Senate numbered 111, and as the Secretary of the Treasury should adopt; that the Secretary
agree to the same with an amendment as follows: In lieu of the of the Treasury should submit annually to the Bureau of the
nsetedby he ente menmen isar Budget an estimate of the appropriations to be made to the
matere ropsedto
the following " 1103 "; and the Senate agree to the name, account; and that he should include In his annual report the
Amendment numbered 112: That the House recede from Its dis- actuarial status of the account. The Senate amendments trans­
agreement to the amendment of the Senate numbered 112, and fer these duties to the Social Security Board. The Senate recedes,
agree to the rame with an amendment as follows: In lieu of the On amendment no. 9: This amendment provides that for every
matter proposed to be inserted by the Senate amendment Iner month during which the Board finds that an aged person, other­
the following " 1104 "; and the Senate agree to the name, wise qualified for Federal old-age benefits under title U1. io regu­
Amendment numbered 113: That the House recede from Its din- larly employed, after he attains the age of 65, a month's benefit
agreement to the amendment of the Senate numbered 113, and will be withheld from such person, under regulations prescribed
agree to the same with an amendment as follows: In lieu of the by the Board, by deductions from one or more payments of old-
matter proposed to be inserted by the Senate amendment insert age benefits to such person. The House recedes.
the following "1105 "; and the Senate agree to the name. On amendments non. 10 and 11: The House bill excepted froml
That the House recede from Its disagreement to the amendment the term " employment ". as used in title II relating to the pay­
of the Senate to the title of the bill and agree to the sae ment of Federal old-age benefits, service performed as an officer
The committee of conference have not agreed on the following or member of the crew of a vessel documented unmder the laws of
amendments: Amendments numbered 17, 67, 68. 83. and 84 the United States or of any foreign country. The Senate amend­
R. L. DouGirTox, ments strike out this exception and expressly Include within the
SAx. B. IRT1 definition of "employment " service performed as an officer or
Tuoa. H. CuLLEN, member of the crew of a vessel documented under the laws of
ALLEN T. TaxsnwAr, the United Staten. The Senate recedes.
ISAAC BACHAxACH, On amendments nos. 12. 13, and 14: These amendments make
The Senate
Managers on fthe part GI tae House. changes in paragraph
On amendment no. numbers.
15: The House bill Inrecedes.
defining the term
PAT HARSN "employment', as used In title 3II relating to the payment et
WILLIAM E. KING, Federal old-age benefits, excepted service performed in the em­
WALTER P. GORGEO. ploy of a corporation, community cheat. fund, or foundation.
HENRT W. XXES organized and operated exclusively for religious, charitable, edien­
ROBERT BL LA FOLLETTE, Jr., tific. literary, or educational purposes, no part of the net earn-
Managers on the part o01h Sente Ings of which inuree to the benefit of any private shareholder or
individual. The Senate amendment adds to the list of purposes
STA~mENT or hospital " as a clarifying Amendment. The Senate recedes.
The msnagers on the part of the House at the conference on the conferees omitting this language as surplusage, based on the
the disagreeing votes of the two Houses on the amendments of the fact that the Internal Revenue Bureau has uniformly construed
Senate to the bill (H. R. 7260) to provide for the general welfare language In the Income-tax laws, Identical with that found In the
by establishing a system of Federal old-age benefits, and by House bill, as exempting hospitals not operated for pront, and
enabling the several States to make more adequate provision for also on the fear that the Insertion of the words added by the
aged persona, dependent and crippled children, maternal and Senate amendment might Interfere with the continuation of the
child welfare, public health. and the administration2 Of their UU- 1oxzg-contlnUed constructiona at the Incoine-tan law.
11322 CONGRESSIONAL RECORD-HOUSE, JULY 17
On amendment no. 16: This amendment excepts from the dell- On amendment no. 51: This is a clarifying amendment. The
nition of ..employment ", as used in title II, relating to the pay- House recedes.
ment of Federal old-age benefits, service performed In the em- On amendment no. 52: This amenndment requires the report
ploy of a corporation. community chest, fund, or foundation or- filed by the State with respect to estimated expenditures for
ganized and operated exclusively for the prevention of cruelty to maternal and child-health services to Include amounts appro­
children or animals. The House recedes. priated or made available by political subdivisions of the State.
on amendments noa. 18 and 19: The House bifl provided that The House bill required only amounts appropriated or made avail­
the Social Security Board should not certify for payment to any able by the State. The House recedes.
State under title III amounts for the administration of the State On amendment no. 53: The House bill provided that the Secre­
unemployment-insurance law unless such law provides for pay- tary of Labor, before stopping payments to a State for maternal
ment of unemployment compensation solely through public em- and child health services on the ground that the State plan Is not
ployment offices In the State. The Senate amendments require being complied with, should give notice and opportunity for hear­
that the State law must provide for payment of unemployment ing to the State agency. The Senate amendment provides that
compensation through public employment offices in the State to the notice and opportunity for hearing must be "reasonable.'
the extent that such offices exist and are designated by the State The House recedes.
for the purpose. The Senate recedes on amendment no. 18. and On amendment no. 54: This is a clarifying amendment. The
the House recedes on amendment no. 19 with an amendment House recedes.
changing the language of the amendment. The effect of the action On amendment no. 55: The House bill provided that the meth­
of the conferees Is to provide that the State law cannot be ap- ods of administration required in the State plan for services to
proved by the Board unless It prov ides for the -payment of un- crippled children should be such as are - found by the Chief of
employment compensation solely through public employment the Children's Bureau to be"1 necessary for the efficient operation
offices In the State or such other agencies as the Board may of the plan. The Senate amendment strikes out the matter above
approve, quoted so that the final judgment as to what methods are neces­
On amendment no. 20: The House bill provided that the Board, sary In the State rests with the courts rather than with the Chief
before stopping payments to a State for grants for unemployment- of the Children's Bureau. The House recedes.
compensation administration on the ground that the State plan Is On amendment no. 56: This is a clarifying amendment. The
not being complied with, should give notice and opportunity for House recedes.
hearing to the State agency. The Senate amendment provides On amendment no. 57: This amendment requires the report
that the notice and opportunity for hearing must be "reasonable." filed by the State with respect to estimated expenditures for serv-
The House recedes. Ices to crippled children to Include amounts- appropriated or made
On amendment no. 21: The House bill, with reference to the available by political subdivisions of the State, The House bill
appropriation authorized for grants to States for aid to dependent required only amounts appropriated or made available by the
children, stated that the appropriation was for the purpose of State. The House recedes,
enabling each State to furnish financial assistance assuring, as far On amendment no. 58: The House bill provided that the Secre­
as practicable under the conditions in such State, a reasonable sub- tary of Labor, before stopping payments to a Stats for services to
sistence compatible with decency and health to dependent children crippled children on the ground that the State plan Is not being
without such subsistence. The Senate amendment states that the complied with, should give notice and opportunity for hearing to
appropriation is for the purpose of enabling each State to furnish the State agency. The Senate amendment provides that the no­
financial assistance, as far as practicable under the conditions in tice and opportunity for hearing must be "reasonable." The
auch St-ate, to needy dependent children. The House recedes. House recedes.
On amendments nos. 22 to 27, 29 to 38, and 40 to 44: The House On amendments nos. 59 and 60: The House bill authorized an
bill placed the administration of title IV, relating to grants to appropriation of $1,500,000 and provided that the money so appro­
States for aid to dependent children In the Social Security Board. priated should be allotted among the States for payment of part
The Senate amendments transfer these functions in part to the of the cost of county and local child welfare services in rural areas.
Secretary of Labor and In part to the Chief of the Children's The purpose of the section was stated to be the cooperation with
Bureau, and make clerical changes to carry out this policy, The State public welfare agencies in establishing, extending, and
Senate recedes, strengthening, In rural areas, public welfare services for four types
On amendment no. 28: The House bill in title IV, relating to of children-homeless, neglected, dependent, and those In danger
grants to States for aid to dependent children, provided that no of becoming delinquent. Senate amendment no. 59, besldes clari­
State plan should be approved which Imposes as a condition for fying the language of the House bill, provided that in making
eligibility for aid to dependent children a residence requirement allotments there should be taken into consideration plans devel­
which denies aid to any child residing in the State who was oped both by the State welfare agency and the Children's Bureau.
born In the State within 1 year Immediately preceding the applica- The areas in which child welfare services were to be encouraged
tion. Thbe Senate amendment permits the State plan to deny aid were extended from "'rural areas" to those "predominantly
to such a child if Its mother has not resided in the State for I rural ". and "other areas In special need" were Included In the
year Immediately preceding the birth. The House recedes, work of developing the work of State services for' encouraging ade­
On amendment no. 39: The House bill provided that the Board, quate support of child welfare organizations. The classes of chil­
before stopping payments to a State for aid to dependent children dren to be aided, however, were limited to those who were home­
on the ground that the State plan is not being complied with, less or neglected. Amendment no. 60 prescribes the method of
should give notice and opportunity for hearing to the State mknpa en.ThHosrcdson amenm tno60an
agency. The Senate amendment provides that the notice and recedes on amendment no. 59 with an amendment, to the effect
opportunity for hearing must be "reasonable." The House that the classes of children to be cared for will Include children
recedes. who are homeless, dependent, neglected, or In danger of becoming
On amendment no. 45: This amendment adds to the definition delinquent.
of a " dependent child " for the purposes of title IV, giving aid to On amendment no. 61: The House bill authorized additional
dependent children, a requirement that the child must have been appropriations for the administration of the Vocational Rehabilits.­
deprived of parental support or care by reason of the death, tion Act of June 2, 1920, as amended, by the "1Federal agency
continued absence from the home, or physical or mental in- authorized to administer It." The Senate amendment provides
capacity of a parent. The House recedes, that the authorized appropriation should be for the administra­
On amendment no. 46: The '1.ouse bill In defining the term tion of such act by the Office of Education in the Department of
"dependent child " for the purposes of title IV, relating to grants the Interior, The Senate recedes.
to States for aid to dependent children, contained a requirement On amendments nos. 62. 63. and 64: These are clarifying amiend­
that the child must be living in a " residence " maintained by one ments. The House recedes.
or more of certain relatives as his or their own home. The On amendment no. 65: The House bill established a Social
Senate amendment clarifies the meaning of the word -residence ' Security Board for the administration of certain portions of the
by making It certain that it is not confined to a separately main- act. This amendment provides that the Board shall be established
tained house but refers to any place of abode, whether a separate In the Department of Labor, The Senate recedes,
house, an apartment, a room, a houseboat, or other place of abode. On amendment no. 66: This amendment provides that no mem­
The House recedes. ber of the Social Security Board during his term shall engage In
On amendments noa. 47 and 48: Under the House bill the allot- any other business, vocation, or employment, and also that not
ments to each State from appropriations made for maternal more than two of the members of the Board shlln be members of
and child-health services were made on the basis of the live births the same political party. The House recedes.
In such State as compared with the total number of live births On amendment no. 69: ThIs amendment provides that appoint­
in the United States. The Senate amendments provide that the ments of attorneys and experts by the Social Security Board may
proration shall be made on the basis of figures for the latest be made without regard to the civil service laws. The House
calendar year for which the Bureau of the Census has available recedes.
statistics. The House recedes. On amendment no. 70: This amendment provides that the report
On amendment no. 49: This Is a clarifying amendment. The of the Social Security Board to Congress, required by the House
House recedes. bill, shall be made through the Secretary of Labor. The Senate
On amendment -no. 50: The House bill provided that the methods recedes.
of administration required In the State plan for maternal and On amendments nos. 71 and 72: The House bill provides that If
child-health services should be such as are "found by the Chief more or less than the correct amount of tax under title VII Is
of the Children's Bureau to be"I necessary for the efficient opera- paid with respect to any wage payment, then proper adjustments
t~on of the plan. The Senate amendment strikes out the matter should be made In connection with subsequent wage payments to
above quoted so that the final judgment as to what methods are the same individual by the same employer. The Senate amend­
necessary In the State rests with the courts rather than with the ments provide that such adjustments shall be made without In­
Chief of the ChIldren's Bureau. The House recedes. terest, The House recedes.
1935 CONGRESSIONAL RECORD-HOUSE 11323
On amendment no. 73: This amendment provides that if the tax 'munity chest, fund, or foundation organized and operated ex­
Imposed by title Vill is not paid when due there shall be added clusively for religious, charitable, scientific, literary. or eduica­
as pBart of the tax interest at the rate Of one-half of 1 percent tlonal purposes, no part of the net earnings of Which Inures to
per month from the date the tax became due until paid. Under the benefit of any private shareholder or individual. The Senate
the House bill the rate was 1 percent a month. The House recedes amendment adds to the list of purposes "or hospital " as a clari­
With an amendment correcting a clerical error. fying amendment. The Senate recedes In conformity with the
On amendment no. 74: This amendment provides that the Post- action on amendment no. 15.
master General shall each month send a statement to the Treasuary On amendment no. 93: This amendment excepts from the defi­
of the additional expenditures incurred by the Post Office Depart- nition of " employment ", as used in title ix imposing certain ex­
ment In carrying out its duties under this act, and that the Secre- cise taxes, service performed In the employ of a corporation, Coln­
tary Of the Treasury shall be directed to advance, from time to munity chest, fund, or foundation organized and operated el­
time, to the credit of the Post Office Department, " from appro- clusively for the prevention of cruelty to children or annimsls
priatlons made for the collection and payment of taxes provided The House recedes.
under section 707 of this title '", such amounts as may be required On amendment no. 94: Under the House bill in title MI pro­
for additional expenditures Incurred by the Post Office Depart- viding for a tax on employers with a credit against the tax of
ment In the performance of the duties and functions required of contributions paid into an employment flund under a State law,
the Postal Service by the act. The House recedes with clarifying the term "unemployment fund" was defined as a fund " all the
amendments, assets of which are mingled and undivided and in which no sepa­
On amendments nos. 75 and 77: The House bill excepted from rate account Is maintained with respect to any person "; In other
the term "employment".~ as used In title VII imposing certain words, requiring a "1pooled " fund. The Senate amendment strikes
excise taxes, service performed as an officer or member of the out this requirement, leaving it to the State to define the character
crew of a vessel documented under the laws of the United States of its special fund. The House recedes.
or of any foreign country. The Senate amendments strike out On amendment no. 95: This Is a clerical amendment. The House
this exception and expressly include within the definition of recedes.
" employment " service performed as an officer or member of the On amendments nos. 96 and 97: Amendment no. 96 provides that
crew of a vessel documented under the laws of the United States, a taxpayer under section 901 (unemployment excise tax) may, for
The Senate recedes. 1938 or any taxable year thereafter, obtain an additional Credit
On amendment no. 76: The House bill excepted from the term against his tax under certain conditions. A taxpayer Carrying On
employment ", as used In Title VII relating to certain excise business in a State will credit against the tax the amount of his
taxes, service performed by an Individual who has attained the contributions under the law of that State; and, under this new
age of 65. The Senate amendment strikes out this exception. section, he will also credit the aMount by which his contributions
The Senate recedes, are less than they would have been if he had been contributing
On amendments nos. 78, 79, and 80: These are amendments to at the maximum rate in the State. The additional credit, however,
paragraph numbers. The Senate recedes, Is limited by not allowing it to exceed the difference between the
On amendment no. 81: The House bill In defining the term actual amount paid and the amount he would have paid at a 2.7
employment ", as used In title VIII Imposing certain excise percent rate; and the amendment also provides for limiting the
taxes, excepted service performed in the employ of a corporation, additional credit to the proper difference allowed by, the State law,
community chest, fund, or foundation, organized and operated diminishing It if the employer has failed to make any of the con­
exclusively for religious, charitable, scientific, literary, or educa- tributions required of him. In figrngwa contributions the
tional purposes, no part of the net earnings of which inures to employer would have paid at the m iumrate, the highest rate
the benefit of any private shareholder or Individual. The Senate applicable to any employer each time when contributions are pay­
amendment adds to the list of purposes "or hospital " as a able Is the rate considered. The amendment also provides that even
clarifying amendment. The Senate recedes In conformity with if an employer is getting credit under section 902, and additions!
the action on amendmelit no. 15. credit under this section, he shall never credit against tax more
On amendment no. 82: This amendment excepts from the than 90 percent of the tax. Amendment no. 97 places restrictions
definition of " employment '", as used in title VIII relating to on the allowance of the additional credit.
certain excise taxes, service performed in the employ of a cor- (1) A taxpayer who has been contributing to a pooled fund, and
poratlon. community chest, fund, or foundation, organized and is allowed a lower rate than that Imposed on other employers In
operated exclusively for the prevention of cruelty to children or the State, will get the additional credit only if he has had 3 years'
animals. The House recedes, compensation experience under the State law, and only it the lower
On amendment no. 85: This is a change in a title heading. rate Is fixed as a result of his comparatively favorable experience.
The House recedes with an amendment to conform to the action (2) The taxpayer may have guaranteed the employment of his
on amendment no. 91. employees, and be contributing to a guaranteed employment ac­
On amendments nos. 86 and 87: The House bill provided as count maintained by the State agency. In this case, If he claimed
one of the conditions for the approval of a State law for un- the additional credit under section 909, be would get It only If his
employment compensation that the law must provide that all guaranty had been fulfilled, and1 only If his guaranteed employment
compensation is to be paid through public employment offices In account amounted to at least 7 /2 percent of his guaranteed pay roil.
the State. The Senate amendment changes this requirement so (3) The taxpayer may be contributing to a separate reserve ac­
that compensation must be paid through public employment count, from which benefits are payable only to his employees. it
offices in the State to the extent that such offices exist and are he claims the additional credit under section 909, it would be
designated by the State for the purpose. The Senate recedes on allowed only if. in the preceding year,those of his employees who
amendment no. 86 and the House recedes on amendment no. 87 became unemployed and were eligible for compensation received
with an amendment changing the language of the amendment, compensation from the reserve account. Furthermore, the addi­
The effect of the action of the conferees is to provide that the tional credit would be allowed only if the reserve account amounted
Board shall not approve any State law unless the law provides to 7y2 percent of his pay roll, and was at least five times larger
that all compensation is to be paid through public employment than the amount pald out from It, In compensation, In that year
offices in the State or such other agencies as the Board may (among the 3 preceding years) when the greatest amount was thus
approve, paid out from It.
On amendment no. 88: The House bill provided that the Social The amendments also defines terms used in this section:
Security Board shall certify each State whose unemployment coin- (1) I"Reserve account'" Is defined as a separate account In a
pensation law is approved, except that it shall not, certify any State unemployment fund, from which compensation Is payable
State which, after notice and opportunity for1 hearing to the State only to the former employees of the employers contributing to the
agency, the Board finds has changed its law so that It no longer account. The account may be maintained with respect to one
contains the provisions specified In the bill or has failed substan- employer or a group of employers.
tially to comply with such provisions. The Senate amendment (2) "1Pooled fund"1 is an unemployment fund (or part of such a
provides that the notice and opportunity for hearing must be fund, If some employers are maintaining separate accounts in the
reasonable." The House recedes, fund) In which all contributions are mingled and undivided. Coin­
On amendment no. 89: This amendment provides that if the pensation is payable from It regardless of whether the claimant was
excise tax imposed by title IX is not paid when due, there shanl formerly in the employ of an employer contributing to the pooled
be added as part of the tax interest at the rate of one-half of 1 fund: but where some employers in the State have reserve accounts,
percent per month from the date the tax became due until paid. their former employees get compensation from the pooled fund only
Under the House bill the rate of interest was 1 percent a month. If the reserve accoiunts are exhausted.
The House recedes. (3) "Guaranteed employment account" IIs, like a reserve so~­
On amendments nos. 90 and 91: The House bill provided that the count, a separate account In an unemployment fund, but it can
term "employment",' as used in title IX, should not include anyd be maintained only with respect to certain employers. Compen­
person unless on each of some 20 days during the taxable year, sation Is payable from it to those of such employer's employees
each day being in a different calendar week, the total number of who, having been guaranteed employment, nevertheless become
individuals Who were In his employ for some portion of the day unemployed due to a failure to fulfill the guaranty, or become
(whether or not at the same moment of time) was 10 or more, unemployed at the end of the year for which the guaranty was
The Senate amendments reduce the number of days from 20 to made, due to the nonrenewal of the guaranty. lb be a I guar­
13 and the number of individuals from 10 to 4. The Senate re- anteed employmenacotsuhepreacunt would have
cedes on amendment no. 90 and the House recedes on amendment to be maintained with respect to an employer who had guaranteed
no. 91 with an amendment fixing the number of Individuals at the wages of all of his employees (or it he maintains more than
eight. one distinct business establishment, of all the employees, In at
On amendment no. 92: The House bill, In defining the term least one such lestablishment) for at least 40 weeks in a 12-month
-employment ", as used in title 3LX relating to certain excise taxes, period. The wages guaranteed should be for at least So hours a
excepted service performed In the employ of a corporation, comn- Week; but If U1 weekS, for Instaxce, were guaranteed instead of
11324 CONGRESSIONAL RECORD-HOUSE JULY 17
40, the weekly hours guaranteed could be cut from 30 to 29; and Most of the amendments are purely, clarifying.
if 42 weeks were guaranteed, only 28 hours wages per week would You will appreciate the fact that the drafting service
need to be guaranteed. While ordinarily aUl the employees would
have to be covered, the employer would not have to extend the which serves the House also serves the Senate. We pass a
guaranty to any new employee until the latter had served a pro- bill first, and they have a little more time when they go
bationary period of not more than 12 consecutive weeks, before the Senate coimnittee to improve the language-.
(4) "Year of compensation experience ", used only In relationM
to an employer, Is defined as any calendar year during which, at Many of the amendments are simply to improve the Ianl­
all times In the year. a former employee of such employer, If there guage. In other words, they are clarifying amendments. I
was one who was eligible for compensation, could receive com- am not going to take your time with those.
pensation under the State law.
On amendments nos. 98 to 104: These amendments Insert a new There are certain outstanding Senate amendments upon
title to provide for grants to States for aid to the blind, aulthor- which the conferees of the House have agreed, and to which
izing *3,000.000 for the fiscal year ending June 30. 1936. and I wish to call your attention, The first of these is the so-
thereafter a sum sufficient to carry out the title. Aid to the blind called " Russell amendment." You will recall that under
Is defined as money payments to permanently blind individuals
and money expended for locating blind persons, for providing the old-age assistance plan, as passed by the House, the
diagnoses of their eye condition, and for training and employment Federal Government contributes dollar for dollar to State
of the adult blind. The payments are to be made on an equal pension funds to the extent of $15 per person per month.
matching basis, the machinery for the payments being modeledInodrfraSteogtayofhiFdrlcnrbuo,
on the provisions of title I relating to old-age assistance. TheInodrfraSteogtaYofhiFdrlcnrbuo,
administration of the title is placed in the Social Security Board, the State must have a State-wide pension plan and must Put
The State plan In order to be approved must. in addition to that plan into operation, and then the Federal Government
similar requirements as in the case of title I, provide that no aid matches whatever amount the State puts up, to the extent of
will be furnished an Individual with respect to any period with
respect to which he Is receiving old-age assistance under a Stt $15 per person per month.
plan approved under title I. The State plan must also provide The Russell amendment grew out of the fact that certain
that money payments to a permanently blind Individual will be States have constitutional prohibitions against a State pen-
granted In direct proportion to his need and the plan must also .
contain definitions of "blindness " and " needy individuals " which sion Plan. So the Senate adopted amendment no. 4. on
meet the approval of the Board. There Is no age requirement. page 5 of the bill. That amendment, in brief, provides that
and the Federal contribution In the case of any individual Is not any State, for a period of 2 years, which does not have a
to exceed $18 a month. The House recedes on this new title with pension plan approved by the social-security board and
amendments striking out the provisions relating to the expendi-unewhcItansurFdracoriton rFdrl
ture of moneys for locating blind persons, for providing diagnosesunewhcitansurFdrlcorbtonr del
of their eye condition, and for training and employment of the assistnce. may receive from the Federal Government dur­
adult blind; providing for money payments to blind persons in ing that first 2 years, $15 per person for qualified citizens of
lieu of persons who are "1permanently" blind; and omitting the a State. qualified under the provisions of the act to receive
requirements that the State plan must provide that money pay­
ments will be granted In direct proportion to the need of the old-age pensions. For instance, the so-called "1Russell
Individual and that the plan must contain definitions of " blind- amendment " provides that the Federal Government shall
ness and "1needy Individuals." cnrbt h nieaon fpnin oneyae
On amendment no. 105: This amendment provides pensions cotiuetefnieaontooesosroneyae
heads of families and single persons of Indian blood over 68 years persons in those States that are not under a State pension
of age, payable from the Federal Treasury. The pension i $30 a plan, and that the amount so paid shall be $15 per month to
month, reduced In the amount of the annual Income. The amend- each person in such States who can qualify under the pro­
ment also provides for a pension of *10 a month for persons of visions of this act.
Indian blood under 65 years of age but permanently blind, and also
a pension of $10 a month for persons of Indian blood crippled or Mr. TERRY. Will the gentleman yield?
otherwise disabled. Indians and Eskimos of Alaska are to receive Mr. SAMUEL B. HILL. In Just a moment. States that
pensions In one-half the amounts above provided. The Senate can qualify within that period get only so much, not exceed­
recedes.
On amendments nos. 106, 107. 110. 111. 112, and 113: Thiese ing $15 per person, as the States contribute. A State with
amendments make changes In title and section numbers. The an approved pension plan may pay to its pensioners or its
House recedes with the necessary amendments, aged needy a total of $20 per month. The State In that
On amendments nos. 108 and 109: The House bill provided that case would pay $10 and the Federal Government would pay
nothing in the act should be construed as authorizing any Federal
official, In carrying out any provision of the act, to take charge of a $10; but under the Russell amendment, where a State has
child over the objection of either parent or of the person standing no plan, the Federal Government would pay the $15 per
In loco parentis to the child " In violation of the law of a State." month per person in such State.
Senate amendment no, 108 added State officials to the officials
affected by the amendment and Senate amendment no. 109 struck Mr. TERRY. Will the gentleman yield now?
out the language above quoted. " in violation of the law of a State." Mr. SAMUEL B. HILL. I Yiekld
The Senat6 recedes on amendment no. 108 and the House recedes Mr. TERRY. Under the Russell plan Is It the gentleman's
on amendment no, 109.
The House recedes from Its disagreement to the amendment of idea that those States which are financially unable to con­
the Senate to the title of the bill. tribute to an old-age-pension plan would get the benefit of
On amendments nos. 17, 67. 68, 83. and 84 (dealing with the ex- the Federal allowance up until 1937?
emption of priyate pension plans In titles II and VMI) the con- M.SMULBHL.ThtwshefecofIbti
ferees are unable to agree. M.SME .HL. htwsteefc fibtI
R. L. DouGHTON, grew out of the fact-­
SAM B. Ha.L, W ER.I rwoto htfcbtde o h
THos. H. u.=.M.TRY I rwoto ta at utde o h
ALI~xN T. TREADWAY, gentleman feel that the people in those States which cannot
ISAAC BACHARACH. contribute at this time on account of the depression should
be allowed until 1937?
Managers on the part of the House.
Mr. DOUGHTION. Mr. Speaker, I yield 10 mInutes to the Mr. SAMUEL B. THILL. It simply comes down to a ques­
gentleman from Washington [Mr. SAMUEL B.HLL tion of whether you are going to have a purely Federal pen­
Mr. SAMUEL B. HILL. Mr. Speaker, the conferees on the sion fund or a Federal-aid pension fund. If you once adopt
social-security binl have agreed on all of the amendments in that policy you will never get out of it. It Is a question for
controversy except the so-called " Clark amendments"11 plus the Congress to determine, as we did determine In passing
an amendment to that amendment known as the"~ the original bill, that we would have a Federal assistance
amendment." Blc plan and not a Federal plan.
There were 113 Senate amendments. There are five of Mr. HUDDLESTON. Winl the gentleman yield?
those amendments constituting a group known as the I~Clark Mr. SAMUEL B. HILL1. I ~'1eld.
amendments " and to which the House conferees disagreed1 in Mr. HUDDLESTON. Is It the gentleman's interpretation
conference, and we have brought them back to the House of the provision agreed upon by the conferees that only those
without including them in the conference report. of the States can participate under that clause which have in their
remaining 108 Senate amendments, about 50 percent of them constitutions prohibitions again a pension fund?
were agreed to by the House, and the senate receded on Mr. SAMUEL B. HILL.- Yes. The amendment t:~t we
about the other 50 Percent, with some amendments to cer- bring back here Is to that effect. In other words, Bt Is
tain of those Senate amendments. applicable only to those States.
1935 CONGRESSIONAL RECORD-HOUSE 11325
Mvr. HUDDLESTON. It Is applicable only to those States Mr. GREEN. It must be matched dollar for dollar?
which have a fiat prohibition in their constitutions against Mr. SAMUEL B. HILL. Yes; dollar for dollar.
a Pension plan? Mr. McFARLAN-S. Mr. Speaker, will the gentleman yield
Mr. SAMUEL B. HILL. The gentleman is correct, right there?
Mr. HUTJDLESTON. Now, may I ask the gentleman this Mr. SAMUEL B. HILL. Yes.
question: Suppose States have in their constitutions tax limi- Mr. McFARLANE. Do I understand that for the next
tations which forbid the raising of suffcient funds to pay 2-year period the States affected would have to put up any
Pensions, will States in that category be able to participate? money, or would they get $15 a month?
Mr. SAMUEL B. HILL. Not under this amendment, as I Mr. SAMUEL B. HILL. The Federal Government will not
understand it. In fact, they ought not to. They ought to pay $15 to them unless they come through with $15 either
come in with every other State. We have a number of States from the State government or some subdivision of the State.
throughout the United States that will have to enact legisla- They must first put up pension money to be matched by the
tion in order to come under the provisions of this act. Federal Government. They will not get any Federal money
This Russell amendment, as amended at the conference otherwise.
and brought back to you, simply places the State which ha.s Mr. GREEN. I mean before this becomes effective.
a constitutional prohibition against State pension plans on Mr. SAMUEL B. HILL. That is true.
the Same basis as all other States which can, under their Mr. MOTT. Mr. Speaker, will the gentleman yield?
constitutions, participate in such a plan. Mr. SAMUEL B. HILL. I yield.
Mr. NICHOLS. Mr. Speaker, will the gentleman yield? Mr. MOTT. But as to the State which already has an
Mr. SAMUEL B. HELL. I yield. old-age-pension law which may not conform to the Federal
Mr. NICHOLS. I should like to ask the gentleman if his requirement, they would have to change their law before
interpretation of the amendment finally placed in the bill by they could qualify.
the House conferees in place of section 4 does not do simply Mr. SAMUEL B. HILL. Unless it Is a substantial compli­
this: That if a State has a constitutional prohibition against ance, unless the law now substantially complies. The fact of
its legislature enacting legislation to bring the State within the matter is most of the States will have to make some
the purview of this bill, that under this amendment the State modification of their pension laws to come within the pro­
may participate provided some subdivision or subdivisions of visions Of this bill.
the State government match the Federal grants without the Mr. MOlT. How will the term "1substantialcompliance"
State doing it itself. be interpreted?
Mr. AMUL Th getlean hs satedit ery
B.HIL~ Mr. SAMUEL B. HILL. That is a matter to be determined
Mor.etlSaMUE B.rHonisl. Tegnlmnhssae tvr by the social security board; but I take it they are not going
Mr. NICHOLS. That being true, then this language does to split hairs.
not mean that if there Is a constitutional prohibition against Mr. MOTT. They are going to interpret it liberally?
law to bring the State within the
the legislature passing a hisbil,edeal Mr. SAMUEL B. HILL. Yes.
puriewof
tat he ovenmet wll ake Mr. FERGUSON. Mr. Speaker, if the gentleman will yield,
the
Fedealtovermen
purview ofanths billu tatycnrbuinfo wlmak to clarify the situation, under the Russell amendment States
theeridograntswitoustaycnrbto ro h tto would receive up to $15 a month without financial partici­
SMUEItB.oesnot;no.pation
W. ILL for 2 years. Under the amendment as brought in by
Mr. SAMUELSB. HILL Iht dos noatly no. hRssl the conferees the proposition of matching is still intact as
amnmr.ntiCHLS wand ithaot? I xcl ha h usl originally provided in the House bill, and dollar for dollar
wa It othas
amenmen did to be matched when the State participates.
Mr. SAMUEL B. HILL. That is what it did, not only to Mr. SAMUEL B. HILL. I will say to the gentleman as a
that class of States but to all other States for a period of 2 Member of this House you have put back upon your State
years--States which had no State pension plan, the responsibility of restoring this matching provision. The
Mr. NICHOLS. In the event the State constitution was money may be contributed by the communities or subdivi­
silent as to whether the legislature could pass old-age-pension sions of the State, for instance, but the Federal money must
legislation, and assuming the attorney general of the State be matched by money within the State to make it possible
should hold that by reason of the constitution being silent for them to participate.
on the subJect that legislation could not be had touching it Mr. FERGUSON. All this requires Is that the State get
until such time as the constitution was amended, does the the money from some source if the constitution prohibits
gentleman think that the other subdivisions of the State action by the State legislature.
government down to the county and city could raise the Mr. SAMUEL B. HILL. All this does Is to make State
money with which to match the Federal funds? participation possible by getting money from some subdivi­
Mr. SAMUEL B. HILL.. That would be a matter left to sion of the State.
the interpretation of the board upon the presentation of the Mr. DUNN of Pennsylvania. Mr. Speaker, will the gentle­
law and constitutional provisions, man yield?
Mr. PATMiAN. Aft. Speaker, will the gentleman yield? Mr. SAMUEL B. HILL. I yield.
Mr. SAMUEL B. HILL.T I yield. [Here the gavel fell.]
Mr. PATMAN. Will the gentleman place in the RECORD Mr. DOUGHTON. Mr. Speaker, I yield 5 additional min­
the names of the States involved? utes to the gentleman from Washington.
Mr. SAMUEL B. HILL. Yes; I think I1 can do it. The Mr. DUNN of Pennsylvania. I wish the gentleman would
gentleman means involved by reason of some State consti- explain this situation: In the State of Pennsylvania it winl
tutional prohibition? be necessary to a mend the State constitution before an old-
Mr. PATMAN. Yes. age-pension law can be passed; it is forbidden by the con­
Mr. SAMUEL B. HILL. I am not certain that I have all stitution. It would take at least 5 years to amend the con­
the names of the States In mind; there are three or four of stitution.
them. I understand that Georgia, Florida, and possibly The legislature has appropriated money to give the aged
Oklahoma and Texas are the States in question. relief. In the gentleman's opinion, will this bill help the
Mr. GREEN. Mr. Speaker, will the gentleman yield? aged of Pennsylvania?
Mr. SAMUEL B. HILL. I yield. Mr. SAMUEL B. HILLT. It will if the counties, or some
Mr. GREEN. It is necessary for these county and city other subdivisions of the State government, will contribute
units to make the contribution in order to receive the pension money to match the Federal contribution.
benefits? Mr. DUNN of Pennsylvania. It Is not a form of pension.
Mr. SAMUEL B. HHL1. Oh. Yes. Without contribution because the State constitution forbids It.
from within the States there Is not going to be any payment Mr. SAMUEL B. HILLT. I could not answer, for I do not
of Federal money under this act, as amended.. know what the facts ame
T XX-'flI
11326 CONGRESSIONAL RECORD-HOUSE JuLY 17
Mr. BOILEAU. Will the gentleman yield? Mr. DIMOND. Then the striking out or the elimination
Mr. SAMUEL B. HAILT. I yield to the gentleman from of the senate amendment with respect to Indians does not
Wisconsin. mean that this bill does not apply to Indians?
Mr. BOILEAU. May I ask the gentleman to explain the Mr. SAMUEL B. HILL. It does not mean that, but it does
situation in the conference agreement with reference to the mean that the bill will apply to Indians, needy, aged, and
State pools and the reserves within those States? that they will come under the provisions of title -1.
Mr. SAMUEL B. HILL. That is the La Follette amend- Mr. Speaker, I yield back the balance of my time.
ment. The House yielded on the La Follette amendment Mr. DOUGHTON. Mr. Speaker, I yield 5 minutes to the
and It goes in here as passed by the Senate. The gentle- gentleman from Massachusetts [Mr. TREADwAy].
man understands what the La Follette amendment is? Wr. TREADWAY. Mr. Speaker, may T.say at the outset
Mr. BOILEAU. Yes. that the conferees on this bill, both on the part of the Senate
Mr. SAMUEL B. HILL. The House yielded on that mat- and the House, have devoted a great deal of attention in a
ter. I am not going to take more time on the La Follette very sincere and practical way to clearing up some great
amendment because it would take longer than I have at my differences which existed in the two bills as passed by the
disposal, but I think the House will be pleased to go along respective bodies. There is but one impasse. We reached
with It. the point where the conferees could not compromise or agree
The social security board as provided In the House was in any way or manner in relation to what is known as the
an independent agency and the Senate put it under the De- " Clark amendment."
partment of Labor. The conference report presents an agree- The conference report has been explained partially by the
ment in reference to that matter. The original provision of gentleman from Washington, and he has made a careful
the House bill is maintained. In other words, the social se- analysis of It for the Members of the House. A little later, I
curity board will be an independent agency of the Govern- understand, the chairman is agreeable to having the Clark
ment. amendment alone discussed in some detail. At that time I
We have title 10 put In by a Senate amendment, which shall take the opportunity of speaking In support of the
has to do with pensions for the blind. The provisions of that Clark amendment.
amendment as agreed to by the House and as Included in The minority members were glad to sign the conference re­
the conference report are that the needy blind, regardless port. While some of us on this side have been opposed to
of age, are under State plans permitted to have Federal the whole scheme as outlined in this bill, that is water over
assistance, and the Government will match State money to the dam and no longer a factor. The bill has been accepted
the extent of $15; in other words, on the same basis as the in all these details by both branches, and the job of the con­
Federal participation in old-age assistance, except there is ferees was simply to straighten out the differences between
no age limit, the two branches and not go to the fundamental principles
[Here the gavel fell.] of the measure. I think the chairman of the committee
Mr. DOUGHTON. I yield the gentleman 5 additional and his majority colleagues are entitled to a great deal of
minutes. credit for having brought about this agreement. We of the
Mr. DUNN of Pennsylvania. Will the gentleman yield? minority, in our humble capacity, have endeavored as far as
Mr. SAMUEL B. HILL. I yield to the gentleman from we could to cooperate. We could not cooperate, however,
Pennsylvania. so far as the Clark amendment was concerned. Personally.
Mr. DUNN of Pennsylvania. With reference to pensions I feel it is of very great importance that we have a very full
f or the blind in those States that do not give blind people a expression of opinion on the part of the House as to the
pension, may I ask if this bill will help the blind in those merits of this particular amendment which, as I previously
particular States? stated, I will discuss in some detail later. When this bill
Mr. SAMUEL B. HrILL. It will not, until they adopt pen- was up for discussion originally there were many most de­
sion plans or what we may call "1assistance plans." sirable factors in the bill.
Mr. DUNN of Pennsylvania. There are only 22 States in Afr. Speaker, the main purpose of the bill Is to secure coop­
the Union that give benefits to the blind. The blind in those eration on the part of the Federal Government for old-age
States will receive benedlts, while the blind in the other annuities, old-age pensions, and unemployment insurance.
States will not. Those are the major factors of the bill, but there are also, if
Mr. SAMUEL B. HILL. Only those States that have pro- one might say, minor items as well as " window trimmings "
vision for the pensioning of the blind will get assistance to a certain extent which should be taken into consideration.
from thes Federal Goverrnment under tiis bill. We are aiding in the bill some old matters, namely, public
The Senate receded in reference to title 11, placed in health, vocational training, and maternal and child health.
there by Senate amendment, which provides a pension of Then we are setting up in this bill, Mr. Speaker, certain
$30 a month~ for needy Indians, to be paid wholly by the new provisions, namely, aid to dependent children, aid to
Federal GoVernment. There were many provisions in there crippled children, child-welfare services, and pensions for the
that we thought were ill-advised. The legislation was hast- blind. These are certainly all humanitarian movement and
ily drawn and hastily passed, as we thought, without proper should be given our support.
consideration, and while we had a sympathetic interest in So the minor items, to my mind, are most desirable, while
the aged and needy Indians, yet we felt that if we were to the major Items which I have read are in some respects unde­
give them assistance in the form of pensions the matter sirable. The attitude one must decide in voting for or
should have more consideration than had been given the against the final passage of this bill is whether it is desirable
subject and more consideration than could be given the sub- to secure these aids with respect to so-called " minor mat­
ject in this particular legislation; therefore, the Senate re- ters " by voting for other matters that you do not approve of.
ceded, and that title is out. This leaves us in a very embarrassing position. I want to
Mr. DIMOND. Will the gentleman yield? vote for all of these minor items. I want to vote against the
Mr. SAMUEL B. HILL. I yield to the gentleman from major provisions, because I do not think personally they are
Alaska. matters that the Federal Government should undertake at
Mr. DIMOND. Is it the gentleman's idea that the bill as this time, but, In general, I want to commend to my, asso­
drawn applies to Indians as well as othe~r citizens of the ciates on this side of the House the results of the conference,
United States? and, for one, I am very pleased to assure my associates that
Mr. SAMUEL B. HILLT. It does. It is my opinion that I approve of the conference report and will gladly support It,
aged Indians will receive the same benefits as aged white aside from the disapproval which I have already stated in
people or any other aged of the United States, because the discussing the attitude of the majority on the so-called
Indians are by virtue of an act of Congress of 1924 citizens " Clark amendment.
of the United States and have the suame status as any other [Here the gavel fell.]
citizen of our country. Therefore, they are entitled to the Mr. DOUGHTON. Mr. Speaker, I yield 5 minutes to the
provisions of the old-age pension under this title. gentleman from Ohio [Mr. JzaKiNsJ.
1935 CONGRESSIONAL RECORD-HOUSE ~ 11327
Mr. JENKINS of Ohio. Mr. Speaker, not being a member Mr. JENKINS of Ohio. I yield to the gentleman from
of the conference committee, I can, with propriety and with- Tennessee.
out being guilty of self-adulation, go further in saying nice Mr. COOPER of Tennessee. The gentleman will recall
things about the conferees than did my good friend, the that that matter was discussed, and as a part of my remarks
gentleman from Massachusetts [Mr. TREADWAY], because he I inserted the opinion of the Assistant Solicitor General 0on
is a member of the conference committee. the bill.
I took a rather active part in the consideration of this im- Mr. RICH. As amended?
portant bill in the House and naturally I followed the work Mr. COOPER of Tennessee. At the time it passed the
of the conferees closely and I may say to my colleagues on House.
the Republican side that I think we have every reason to be Mr. JENKINS of Ohio. Yes; and I, too, referred to the
proud of the fairness, candor, honesty, and persistency with uncertain and indefinite opinion of the Attorney General as
which the majority members of the conference, as well as to the constitutionality of certain titles of the bill, especially
the minority members, pursued their duties in handling this title 2 and title 8.
Important conference between Members of the House and Mr. Speaker, for the remainder of my time I desire to
Members of the Senate. address myself strictly to the amendment providing for relief
This is probably the most Important and far-reaching to the blind. When this bill was up for consideration by the
measure we have considered in the Congress for many years. House I offered an amendment that would include the blind
By this I mean that it deals with the very bread and butter within the warm folds of the relief sections of this bill. This
of more people than probably any other measure that has amendment was rejected, not on its merits or demerits but
been before Congress for many years. It deals with the poor because the poor blind could be pushed aside by the young
and the aged and the blind and with nearly every strssful " brain trusters" who were fathering the bill at that time.
condition of life that may confront unfortunate people. it The Membership of the House was favorable, but the parti­
provides for the poor widow with her hapless brood of or- san yoke was fitting much closer then than now. But the
Phans; it seeks out the unfortunate youth whose home life Senate has inserted an amendment providing relief for the
is unhappy and who is irresistibly being drawn into the blind in almost the exact language which was contained in
maelstrom of crime and lawlessness; it seeks to remove the my amendment. In effect the Senate adopted my amend­
dark cloud of poverty that has loomed up before the last ment and the conferees have agreed to it. Those of you who
days of many old people, and to plant instead a rainbow of were in favor of my amendment, and for whose assistance
hope that their last days might be happy. It will tell the in that battle I was profoundly thankful, you may now
Poor blind man and woman, the most sorely afflicted of all assure your blind constituents that we have won the day and
our people, that henceforth they need not hold out their tin that they may feel that the flag of hope which they cannot
cups in their thin, emaciated hands, for the people of the see is fLying high today. I thank the conferees in behalf of
greatest Nation in the world have realized that it is the duty the thousands of poor blind who must grope their way
of the fortunate to make provision for the unfortunate, through a dark world.
While this bill indicates an advance in public aid to un- The Senate made only one material change in my amend­
fortunates, I would have you realize that this bill is not to be ment, and I wish to give them credit for it. This amend­
considered as the gift of any person or any administration to ment provides that one need not be afflicted with permna­
these deserving people. Rather it is simply a recognition of nent blindness in order to benefit under this law. One
the sentiment of the people of the Nation toward our un- afflicted with temporary blindness may be included. This
fortunates. It is a milestone marking the growth of civiliza- will be controlled by the State laws and the board in charge
tion from the date of the first murder that we have any of the matter, who will Issue regulations. Why should not a
record of when a member of the first human family in defense person 45 years of age, stricken with total blindness or tern­
of his foul deed said, "Am I my brother's keeper?"1 The hu- porary blindness for a few months or a few years, be entitled
man race has traveled far since then, but Its course has to the benefits of protection just as much as a man who has
generally been upward. reached the age of 65 and who has the possession of his
The conferees were required to assume the task of resolv- sight? Both need help if they have no means of support.
ing 113 amendments. They have discharged this duty with To those of you who are friends of the blind, let me say that
tact and rare sagacity. The inconsequential amendments, this amendment in itself will not give $15 a month to every
such as those of diction and legislative terminology, were needy, blind person in this country. Each State must pasw
soon disposed of. Four or five were of major importance. some sort of legislation and must meet the requirements of
one was the La Follette amendment. Another was the this bill just the same as the States must meet the require­
Russell amendment. Another was restoring authority to the ments of the bill with respect to the aged and the widows
social security board and not dividing it so as to put au- and the children in need. Each State must come forward
thority in the Secretary of Labor, where it should 'not be. with some constructive legislation that will match the re­
Another is the Clark amendment, which has not as yet been quirements of the Federal Government in order that the
composed between the conferees, and which will receive spe- blind people in your State may be taken care of.
cial consideration by the House yet today. Another was the Mr. MAY. Mr. Speaker, will the gentleman yield?
amendment including the blind within the protection of the Mr. JENKINS of Ohio. I shall -be pleased to yield.
bill. I shall revert to that a little later. For fear I might Mr. MAY. I want to get one matter of information that
forget, I should say to those of you who were interested in the gentleman, no doubt, can give me. As I understand this
the question of the constitutionality of the provisions of this measure as a whole, it is predicated upon the idea of partici..
bill and who participated with us in the discussions when the pation by the States with the Federal Government.
bill was before the House that none of these numerous Mr. JENKINS of Ohio. Absolutely,
amendments changes the constitutionality of the bill in the Mr. MAY. Is there any provision whereby in the States,
least. when they fail to comply with the requirements of 'the Fed­
Mr. RICH. Mr. Speaker, if the gentleman will yield, I eral Government. the pensioners in that State can be taken
should like to ask this question: Was this bill submitted to care of by the Federal Government?
the Attorney General to determine whether It is constitu- Mr. JENKINS of Ohio. No. In old age and blind relief
tional or not? the Government contributes only when the State matches
Mr. JENKINS of Ohio. I cannot answer the gentleman as the Government. There are some provisions in this bin
to whether the conferees sought any advice of the Attorney which provide for Federal contribution without State mateh­
General, and I have no desire to enter into a discussion of ing such as health and sanitation relief, but in all the majo~r
the constitutionality of the measure at all in the time al- provisions of this bill State Participation is a necessary con­
lotted mle. dition precedent to Government participation. The philoso­
Mr. COOPER of Tennessee. Wr. Speaker. will the gentle- phy of this plan is to put the administration of this dlass of
maan y~eld? relief upon the States and thereby hold It as close to thq
11328 CONGRESSIONAL RECORD--HOUSE JuLY 17
people as possible. This class of relief Is close to the hearts as to whether or not we will accept the Russell amendment
of the people. They should be permitted to administer it and thus do Justice to all citizens regardless of where they
under close and strictly drawn regulations. This relief to may live.
the blind is intended to make them self-sustaining and to Mr. SAUJTHOFF. Mr. Speaker, will the gentleman yield?
encourage them to feel that they are not unwelcome, but Mr. MILLE R. Yes.
on the other hand that they are recognized as a par t of our Mr. SAUTHOFP. What have those States the gentleman
citizenship and are entitled to encouragement to help bal- mentions done within the last 6 months to remove these
ance the natural handicap under which they are constantly constitutional obstacles?
placed. The Savior of man had compassion for the blind. Mir. MILLE.R. I can speak only for Arkansas. We have
Man himself has sympathy for the blind. This bill permits passed laws to raise money, even to a sales tax.
this sympathy to take tangible form. It transforms sym- Mr. SAUTHOFF. What has your State done with regard
pathy into money, which is a very practical guaranty for to the constitutional prohibition?
happiness. [Applause.] Mr. MILLE R. We have no constitutional prohibition
[Here the gavel fell.] against the enactment of old-age pension laws, and we have
Mr. DOUGHTON. Mr. Speaker, I yield 5 minutes to the enacted such laws, but I know that our eligibles in Arkana
gentleman from Arkansas [Mr. MILLER]. will not receive the sum of $15 a month from the Federal
Mr. MILLER. Mr. Speaker, I should like to discuss for a Government, because our State will not be able to match
minute the parliamentary situation and the question before the funds to that extent. We may be able to make some
us Insofar as the Russell amendment is concerned. I do not contribution, but it will be small, and I think we should have
agree to all that was said by the gentleman from Washing- the time allowed under the amendment in which to place
ton [Mr. SAMUEL B. HILL] as to the effect of the amendment our State finances in shape to meet the requirements, so
proposed by the conferees. Neither do I agree to the pro- that our eligibles in Arkansas will receive the same amount
cedure we are following which deprives the House of the of Federal money as is received by any citizen of any other
right to a separate vote on an amendment as vital as the State. That is all that the Russell amendment does, and it
Russell amendment. is fair, right, and just, and we should adopt it, or rather
The question presented here Is that we must vote the should agree to it, as passed by the Senate.
report up or down before the House can express itself as to It is not pleasing for me to have to call the attention
whether or not they want to adopt and retain the Russell of the House to the fact that Arkansas will not be able to
amendment. If we vote the conference report down a mo- pay its eligibles a pension of $15 per month, but I am more
tion can then be presented to recede and concur in the concerned in obtaining a pension for our aged than I am
Senate amendment, the Russell amendment, which is so in reciting to you the wonderful natural resources that are
vital to some of the States, including Arkansas. If the within our State, because our aged cannot live on these
report is adopted we cannot have a vote on the Russell undeveloped natural resources, and they being citizens of
amendment. Such procedure is not right and in order for the United States are entitled as a matter of right and jus­
us to try to obtain justice for the aged we~should vote the tice to the same amounts as are citizens living in more
conference report down. populous and wealthy States, and the only way for this
It is said that the amendment proposed by the conferees discrimination to be avoided now is to adopt the Russell
requires contribution on the part of some agency in the amendment.
State where the State constitution prohibits the passage of The SPEAKER. The time of the gentleman from Arkan­
participation laws. sas has expired.
MW.SAMUEL B. HILL. Will the gentleman yield? Mr. DOUGHTON. Mr. Speaker, I yield 5 minutes to the
Mr. MILLER. I yield. gentleman from Arkansas [Mr. FULLER].
Mr. SAMUEL B. HILL. It does require the payment. Mr. FULLER. Mr. Speaker, I realize that some of the
Mr. MILLER. Where is it so provided? States are facing a hard proposition to raise money with
Mr. SAMUEL B. HILL. Because we did not take it out. which to match Federal aid for old-age pensions. I realize
Mr. MILLER. Look at the conference report at the bat- that my State is going to be in that condition, but my State
tom of page 1. It says, " In lieu of the matter proposed to has no more rights than any other State in this Union. If
be inserted by the Senate amendment insert the following.- Arkansas cannot comply with this law, God knows it ought
What does " lieu " mean? not to complain and begrudge other States of the benefit,
Mr. SAMUEL B. HILL. The bill, section 3, page 4, pro- This it equal and just to all. Not oniy that, but Arkana
vides: can and will comply with this law, and in a substantial
F'rom the sums appropriated therefor the Secretary of the Treas- manner.
ury shall pay to each State which has an approved plan for old- Mr. MILLER. Mr. Speaker, will the gentleman yield?
age assistance, for each quarter, beginning With the quarter corn- Mr. FULLER. Yes.
mencing July 1. 1935, an amount which shall be used exclusively
as old-age assistance equal to one-half of the total of the sum Mr. MILLER. Does the gentleman think that Arkansas
expended during such quarter as old-age assistance under the is able to contribute $15 a month to the eligibles under this8
State plan with respect to each individual- bill?
And so forth. We do not relieve somebody in the State Mr. FULLER. It may not be able to contribute that much.
from putting up the money, but it does not have to contribute any designated amount.
Mr. MILLER. The only agency that could put up anything The Federal Government contributes and matches any
Is the State itself. amount paid by Arkansas as a pension up to $15 per month.
The gentleman says that there are a few States in the Mr. AMILER. What does the gentleman think that
Union who could not comply because of the constitutional Arkansas can contribute?
provisions. I do not know how many States there are, but Mr. FULLER. Statistics show that Arkansas has 75,000
I understand Georgia Is one of them. The contention I make people over 65 years of age and that less than 15 percent of
Is that if a contribution from the Federal Government is these are eligible for pensions. At $10 per person, it would
Justified, it ought to go to all States alike and should not be mean that Arkansas would be required to raise $1,300,000,
dependent upon the constitutional provisions' of a State nor which amount, being matched by the Federal Government,
upon its present ability to match the Federal funds, would pay an average pension of $20 each. The recent legis-.
They say it is a question of Federal ald or Federal pen- lature of our State provided for practically $1,000,000 for
sion. I do not care what you term it. There is no Justifica- this purpose and we can and will raise what is necessary to
tion for discriminating against a citizen of Oklahoma or Ar- take care of the eligibles who are in need over 65 years of age.
kansas or anywhere else In favor of a citizen in any other if it should develop that we cannot raise $10 per person, we
State. This Federal money is being contributed by the Fed- can reduce our contribution. In some localities, as Is true
eral Government, and it ought to go to all of the citizens who everywhere, many have never made as much, on an average,
are eligible, and we ought to have a right to a separate vote Ias $1 a month in cash and could very Well get along with
 1935 CONGRESSIONAL RECORD-HOUSE 11329
much less than $30 per month. It Is true, however, in cities, stop and give the country time to recover. I never thoughi
where rent must be paid, a larger pension should be allowed. I would live to see the day when the Federal Government
This measure is all based upon mned, and it is not contem- would take the taxpayers, money to pay pensions to the
Plated that the State and Federal Governments will provide aged; but the time has come, the emergency is here, and we
better living conditions than these people have enjoyed dur- might as well face it. We ought to perform this duty fairly,
ing their lives. We cannot afford to kill thrift and ambition, justly, and equitably, to all alike, and no State or any class
We Cannot afford to take the attitude simply because one is of people are entitled to preference over any other. I have
65 Years of age that they are going to remain on " flowery no sympathy with the argument that the Federal Govern­
beds Of ease " by reason of a big pension; this is based wholly ment ought to bear all the burden and pay everyone a penl­
and entirely on the theory of helping those who cannot help sion of a certain age and take care of everyone wanting re­
themselves and can never be construed anything else than a lief. The true test should be to help the needy, those Who
dole. cannot help themselves, and carry out the spirit of the Good
Mr. MILLER. Do I understand the gentleman to say that Samaritan and to perform our duty to our neighbor whO
a citizen 65 years of age is not entitled to as much as $10 a is in distress.
month? Every State seeking relief In the way of a pension for its
Mr. FULLER. I want to say that nobody, simply because citizens should Match What the Federal Government Is Will­
65 Years of age, is entitled to any money as a pension; the ing to pay. I realize that in the future we will hear of
Government owes no real obligation to give anybody a pension. people running for Congress on the platform that the States
Mr. KELLER. Why not? Why are we doing It? should not pay any of this obligation but the Federal 00w'­
Mr. FULLER. Not as a governmental, legal, or financial ermient should pay it all, and in an amount possibly up to
duty, but as a humanitarian, social-welfare act to take care $200 a month. But we all realize that is only political propa­
of the unfortunate needy-those who cannot take care of ganda for the purpose of obtaining offce and that It 1s a.
themselves, burden the Government cannot possm.*- bear.
Mr. VINSON of Kentucky. Mr. Speaker, will the gentle- Mr. GIFFORD. Will the gentleman yield?
man yield? Mr. F'ULLER. I yield..
Mr. FULLER. -Yes. Mr. GIFFORD. The gentleman made the statement that
Mr. VILNSON of Kentucky. The legislatures of the resPec- there are many people in the State of Arkansas who never
tive States will determine the amount of the pension and averaged $10 a month. Last year, under Mr. Hopkins, were
those who are eligible. they not paid the usual 45 cents an hour, and have they not
Mr. FULLER. Certainly, made more than $10 a month?
Mr. HUDDLESTON. Is it the gentleman's Interpretation Mr. FULLER. Yes. That is true, although those able to
of this amendment, in the form reported by the conferees, work and make more were only paid about $19 per month,
that if Arkansas should make no contribution, Arkansas; will rApplause.i
get nothing? The SPEAKER pro tempore. The time of the gentleman
Mr. FULLER. That Is right. There are a few States infrmAkna[M.FLE]hseped
the Ui~ion, two, possibly three, which have a prohibition in from DkanasT[M. FULr] hpase, exireld.3mntsth
their constitutions against using money for this particular gnlman.fromGHON.ahmr. Spakr, INieulds mnte o h
purpose. They want until January 1, 1937, to correct this gnlmnfo kaoa[r IH~)
condition, so they can participate and get money for this Mr. NICHOLS. Mr. Speaker, I am satisfied the House,
purpose and receive aid from the Nation. We grant those when It comes to a vote, is going to do the usual thing and
States that request, with the provision that while the State adopt the conference report suggested by the conferees;
itself cannot match the Federal money, they cannot get any but you be just advised of what you are doing. There are 18
money for that State unless a county or a municipality or States in the United States that will not get one cent of the
some particular subdivision of the government matches the money provided for under this bill.
Flederal money. None of this Federal money can go to a State The distinguished gentlemen of the committee say that
unless matched by the State or a subdivision thereof. I am no State should be permitted to have any, of this money unless
sorry to have to differ with my colleagues, but I am really they match the money. Well, why not? Where does this
chagrined to hear them talk about Arkansas being poverty money come from? It comes from Federal taxation, does it
stricken. Arkansas is not poverty stricken. Arkansas, in not? When you gather that money, when you get Federal
natural resources, is one of the most wonderful and rich taxes, you go into every State in the United Stateg and you
States in the Union. [Applause.] take It f rom every individual in the United States. There
I have devoted a greater portion of my life exclaiming the are no boundary lines; there are no geographical subdi­
grandeurs and virtues, wealth and undeveloped resources of visions which you exempt from the payment of taxes. You
my State. We proudly boast of Arkansas as the "1Wonder collect Federal taxes from all over the United States alike.
State "1, and I cannot pass unichallenged the statement that What is this? This is paying back to people in a, certain
we cannot do what other States in the Union can and will do. class the benefits derived from Federal taxes. Then why,
In the last few Years we have had unprecedented floods and in the name of common sense, should you, when you get
droughts; in addition, we have had a financial depression ready to pay back the benefits of government derived from
which is common all over the country. Without these catas- Federal taxes, set up geographical boundaries or State lines
trophes we would not be seeking or accepting relief at the and say, "1Old man or old woman, 65 years of age or more,
hands of the Federal Government. Arkansas is ready, able, if you live in a State where the constitution will not permit
and willing, and will, in a substantial way, contribute its that State to raise funds to match Federal funds, or if you
portion and take care of its needy over 65 years of age. live In a State where the legislature will not pass legislation
The SPEAKER. The time of the gentleman from Arkansas to permit the State to meet the funds of the Federal Gov­
has expired. ermient, or if you live in a State whose ad valoremn valuation
Mr. DOUGHTON. Mr. Speaker. I yield 2 minutes to the is so low that they cannot raise me:.ey from taxation, then
gentleman from Arkansas. old man and old woman, American citizen though you may
Mr. FULLER. We ought not to have any benefit from be, old man and old woman, though you have always paid
the Federal Treasury if we do not do our own part. The your Federal taxes, because you live in that kind of a State
God's truth of the matter Is Arkansas has received approxi- you will be discriminated against by the Federal Govermnerit
mately $300,000,000 under this relief program and has paid when it gets ready, to pass back to the people the benefits of
only a few millions into the Federal Treasury, as income government that you yourselves have helped to build up by
taxes. What has happened in my State has happened in a the collection and gathering of Federal taxes "? [Applause.]
great proportion of the other States of the Union. Tile time The SPEAKER pro tempore. The time of the gentleman
has come when we have to protect the Federal Treasury, from Oklahoma [Mr. Kxc~ois] has expired
We have already gone too far in appropriations for various Mr. DOUGHTON. Mr. Speaker, I yield 2 minutes to the
relief. The time has come to call a halt. This dole must gentleman from Oklahoma [Mr. PsousoNI.
11330 CONGRESSIONAL RECORD-HOUSE JULY 17
Mr. FERGUSON. Mr. Speaker, sometime ago I wrote high, and that the President's bill provided no relief for the
every Member of this body explaining the fact that in the needy blind or needy crippled people and the inadequacy of
Senate was inserted an amendment by Senator RusSELL that the amount and because of the constitutional provisions and
would allow the Social Security Act to actually pay a pension. financial conditions of many States-the States would not be
I urged the Membership of the House to watch this bill closely able to match the Government's money and this would deny
and vote with me to make this bill actually pay a pension. pensions to the needy old people in many States and in my
Now is the time to take this action. I talked to many of you State. I also pointed out the inadequacy of the appropria­
personally on this matter. Now we can keep our Word and tion, and that the amount carried in the bill would not
pass a bill to pay a pension. provide more than 80 cents per month for needy old persons
You Members who are going home to States where people in the United States. While the bill was still under con­
are not going to receive any pension are going to regret that sideration, and on April 18. 1935. I offered an amendment (1)
this day you did not vote down the conference report, with to fix the minimum age at 60 years instead of 65, as pro­
instructions that the Russell amendment be retained. What vided In the President's bill. (2) to provide the same amount
are you going to do with the people who are writing you every of pension for the needy blind and needy cripples as to the
day asking, "When are we going to get the money under needy old people, (3) my amendment also provided that the
President Roosevelt's social-security bill?"1 That is going to' Government should pay $25 per month to aged needy per­
be a hard question to answer. If we are going to take the sons, needy blind persons, and needy crippled persons in the
attitude that the committee has taken, that $15 a month will United States without waiting for any contribution from the
bankrupt the Treasury, then this bill is indicted as not being States.
in good faith, because it permits that much if the States will This amendment was strongly urged by me, because
match it. Sometime we are going to be liable for $15 a month, people 60 years of age or over, under our modern system of
if the States are able to do what the Federal Government machinery and efficiency cannot find gainful employment.
says they can do. We are not asking for a perpetual proposi- People who are poor and blind, or poor and crippled, need
tion. For a period of 2 years, under the Russell amendment, a Pension Just as much as old people. I pointed out that
States can participate and the people will actually get a the President's bill provided that no needy old person could
pension check, which they will not get under this law as get at pension until the States should first Pass laws, collect
drawn. [Applause.] taxes, and match the Government's money. I emphasized
In my opinion, under this bill the people of Oklahoma will the fact that the constitution of many States would have to
not receive pensions for at least a year-until such time as be changed, and the financial condition of many States was
we vote to revise our constitution and levy taxes with which such that the States, including Kentucky, would not be able
to match the funds from the Government. I hope the for a long period of time, if at all, to match the Govern­
Membership of this House will not be misled by the substi- ment's money, and therefore, these needy old people in
tute offered for the Russell amendment. This substitute Kentucky and other States similarly situated would be
only gives other local agencies than the State power to denied any pension. These needy old, needy blind, and
match Government funds until July 1, 1937. I hope, and needy crippled people have to have help now, and my
my firm conviction is, that we will recognize that this is amendment provided that the Federal Government, on the
our last opportunity at this session of Congress to actually Passage of this act, should pay each one of them $25 per
pay the old people of the Nation in the States that are not month, at least until July 1937, and gives the States time
qualified to match Government funds, a pension. Let us to change their constitutions, pass new laws, and match the
vote down this conference report and instruct our conferees Government's money, but the President and the Democratic
to accept the Russell amendment as incorporated in the leaders of the House were opposed to any such -amendment,
Senate bill, and actually accept the responsibility of paying and with their big Democratic majority they were able to
our old people a pension immediately on the passage of this defeat my amendment.
bill. I shall be severely disappointed if we vote to accept The President's bill went to the Senate. The Senate
the bill as recommended by the conferees. I know that I amended President Roosevelt's bill in many particulars.
shall have to tell the people entitled to & pension in my Senator Russell offered and secured an amendment to the
State that I failed in my efforts to get them the pension bill in the Senate, which provided that the Federal Govern­
they so justly deserve. I am willing to accept the challenge ment would pay a pension to needy persons 65 years of age,
and work on this proposition until the old people of my or over, until July 1, 1937, without requiring the State to
district are actually receiving pensions, match the Federal Government's money, but in no event
In the short time allotted me by the Ways and Means could this pension exceed $15. per month,
Committee I am unable to make my position clear. I am VON AMZXMS RFU
afraid the Membership of the House does not' fully under- The Senate adopted another amendment authorizing the
stand the position of many States that will receive no pen- payment of $30 per month to Indians and Eskimos who had
sions. I also fully realize that the efforts on the part of aatindhegeo65yrsadwoeicmeasls
few Members here today will be of little effect against the attained ther dageoy 5er,
and whoprvdd
eseionfome wndans les
powerful political prestige of the Ways and Means Com- thanmo $1hpe day, alnd also provded a5 pearsionfo Indianesuor
mittee. OnthwhlItikteCmitehsdna of $10 per monta. This would not require any matching
good job; but in this I believe they neglected their duty toanwilbpidttheIdasadEkmowenhs
see that every qualified person in the United States should masur wis benpactd ito law. Indams atdaskloss tohunderistn
actually receive a pension. It is with little hope that I urge whysuthisgenactpeference shouldma be lownto Indianstand
you to vote for this amendment in the face of such political Esk timos agraint whitereorhoulord citshoens tof thean anitd
prestige, but at least I have the satisfaction of stating my States. If Indianst orit Esos 65lreyearzes of
agereUnired$3
convictions on the floor of the House. Sae.I nin rE~io 5yaso g'eur 3
The SPEAKER pro tempore. The time of the gentleman per month, and Indians and Eskimos less than 65 years of
from Oklahoma [Mr. FERGUSON] has expired age, who are blind, require $10 per month, I cannot under-
Mr. DOUGHTON. Mr. Speaker, I yield 5 minutes to the stand why aged needy white and colored American citizens
gentleman from Kentucky [:Mr. Rosioxrj. 65 years of age and blind persons should not receive equal
Mr. ROBSION of Kentucky. Mr paelde n e-consideration with the Indians and Eskimos.
tlemen of the House, we have before us for consideration COFRE CHANC= BZATZ hXmNmsT
the conference report on H. R. 7260, to provide old-age After the bill passed the Senate, as is provided by the rules
pensions. and so forth. of the House and Senate, this measure was sent to confer­
This is President Rooosevelt's bill, but has been materially ence. The conferees are made up of 5 Members of the
amended in the Senate. It came up for consideration in the House and 5 of the Senate. It is their business to try to
House on Apri1 15, and at that time I made a speech during reconcile the differences in the bill as passed by the House
the general debate Pointing Out that the age limit was too and as passed by the Senate,
 1935 CONGRESSIONAL RECORD-HOUSE 11331
The conferees modifled the Senate amendment as to old- Every, citizen of every State in the Union, directly, or in­
age Pensions for white and colored citizens, but not as to directly, pays taxes into the United States Treasury. The
Indians and Eskimos, and they have submitted a conference rich States like Pennsylvania and New York. Massachusetts,
report setting forth this change, which is as follows: Ohio, Illinois, and so forth, have provided old-age-pension
Which provides that the State plan for old-age assistance, In systems and they are able to match the Federal funds. r
order to be approved by the Board, need not provide for finan- am afraid that Kentucky and many other States similarly
cial participation before July 1. 1937, by the State. In the case of situated might not be able to match the Federal funds, and
any State which the Board, upon application by the State and
after reasonable notice and opportunity for hearing to the State. therefore we will have the spectacle of the people In the rich
finds is prevented by Its constitution from providing such fltnan- States receiving old-age-pension money from the Goverrnment
cialpartcipaion.and the people in the poor States (where they need the pen­
As I understand this amendment as submitted in the con- sions the most) not able to meet the Government's money,
ference report, the Senate amendment providing for as much and not receiving any money from the Government to pay
as $15 per month to needy people 65 years of age or ovcr pensions.~
without State participation is wiped out. Under this con- As I have pointed out, the people of the poor States will
ference amendment the Federal Government can only pay be paying money into the Treasury to provide pensions for
a Pension to needy people 65 years of age without State those living in the rich States but will themselves receive
participation if the constitution of such State prohibits the no pension benefits, and it was this and other circumn­
State from collecting taxes to provide for old-age pensions, stances that led me to offer and strongly urge my amend­
If there is nothing in the ccnstitution of a State prohibiting ment for the Federal Government to pay each needy old
such State from collecting taxes for old-age pensions, then person, each needy blind person, and each needy crippled
It must do so and match the Government's money before the person $25 per month without It being matched by the
Goverrnment can contribute any amount to any needy old State. In this way, each and every needy old, needy blind,
person in such State. In other words, unless the constitu- and needy crippled citizen of the United States would be
tion of Kentucky prohibits the State of Kentucky from col- treated alike and the Federal Government would not show
lecting taxes for old-age pensions, Kentucky must levy and any partiality among its citizens; and furthermore I know
collect taxes and match the Government's money before any- that these classes of people needed help in these terrible
one in Kentucky can get an old-age pension. On the other times of depression and they need it now and perhaps will
hand, if the constitution of Kentucky prohibits the collection never need It so much as they need It now,
of a tax for old-age pensions, then under this amendment I voted for this bill because It was the best bin we had a
submitted by the conferees' report, the Federal Government chance to vote for. Some day we hope to help amend this
could pay to needy people in Kentucky. 65 years of age or law so that it may do substantial Justice to all American
over, and who are not confined In any institution, a pension citizens and so that It will at least not give preference to
not to exceed $15 per month. Indians and Eskimos over white and colored citizens.
I regret very much that this Involved amendment was put Mr. DOUGHTON. Mr. Speaker, I yield the remainder of
into this bill. It should have remained as the Senate passed my time to the gentleman from Kentucky [Mr. VxiqsomJ.
it, which provided that the Federal Governmnent, until July Mr. VINSON of Kentucky. Mr. Speaker, those of us who
1, 1937, could pay a pension amounting to as much as $15 are concernied with legislation affecting the people of this
per month to needy people 65 years of age and over without country are, and should be, happy that this legislation Is
State participation. Under the conferees' amendment It drawing near a conclusion.
must now be debated and argued and decided whether or Some 20 or more years ago, when a great ocean liner
not the constitution of Kentucky prohibits the State of Ken- struck an Iceberg and it became apparent that all could not
tucky from collecting a tax for old-age pensions. Nothing be saved, our country was thrilled with the heroic utterance
can be done to relieve the needy old people of Kentucky and obedience to the order, "Women and children first."
until this is decided, and if it should be decided that the Heroes went to watery graves to carry out this order.
constitution of Kentucky does not prohibit Kentucky from Last year, in June, I think, the President of the United
collecting taxes to match the Government's money for old- States sent a historic message to the Congress in which he
age pensions, then nothing can be done, and there will be said that with all the hazards and vicissitudes of this mod­
no help for the aged needy in Kentucky until Kentucky em life, the first objective of government should be security
passes laws, collects taxes, and matches the Government's for men, women. and children. A second message came to
money. this Congress on January 17 of this year, asking us to give
These old people need help now, and they need It very immediate consideration to this problem of social security.
much; and I am deeply grieved that my amendment was not As a member of the Ways and Means Committee, I Shall
adopted. If it had been adopted, in a short time each needy always be proud of the hours and days I have spent assisting
person in Kentucky 60 years of age or over, each needy in the preparation of this bill. Let me say to the conferees
blind person, and each needy crippled person would begin that, regardless of the work they may do in the future, their
receiving $25 per month. work upon this bill will be a star in their crowns. They
STATE MUST MATCH FEDERAL MONEY have brought back to the House of Representatives a real
As I have heretofore pointed out, unless the constitution social-security bill. Let me say to the membership of this
of Kentucky prohibits the collection of taxes to match the House that of all the votes you will ever cast, even though
Federal money, no needy old person in Kentucky will re- there may be certain parts of It with which you do not agree,
ceive any pension for a considerable time yet. This is true I predict that you will always be happy and proud of your
as to needy blind people. There is no provision in the bill for vote and your participation in this great social-security
needy crippled people. The House and Senate both turned Program,
down my, amendment on that, but the Senate did put in an For the first time In the history of this Nation and in the
amendment authorizing the payment of pensions to needy most comprehensive social program that was ever formu­
blind people, provided the State puts up a like sum. lated by a legislative body, unfortunate people are cared for,
This bill provides that the Government will match State Unfortunate mothers, unfortunate children~ unfortunate
money, one for two, for pensions for dependent children. blind, unfortunate crippled, unfortunate un iployed, un­
needy widows, and needy, orphans. This is also true as to fortunate aged. In the category of the unfort~k.,tes who will
vocational training and the public health. Unless the State be cared for under this legislation we start at (the cradle and
of Kentucky comes along and passes laws, sets up an or- go to the grave. It Is a wonderful program, a programn
ganization. and collects taxes to match the Federal money, benefiting the people of this country.
this legislation will mean nothing to the needy old people, the There may be those who Will say that certain changes
needy, blind people, needy widows, orphans, or dependent should be made, but remember, my friends, pvery dollar that
children in Kentucky, and this is true as to vocational train- goes to the unfortunates under this bill #111 be an addl­
ing for crippled people, tional dollar, one dollar more, to go to them than they 'Would
11332 CONGRESSIONAL RECORD-HOUSE JULY 17
receive without this legislation. It Is a great humanitarian Clark amendment only, whereas this Is an amendment to
program, a program looking toward benefits to people, pro- the Clark amendment, known in conference as the "1Black
viding security, social security, to our unfortunates, from the amendment." I would ask that this be taken up separately.
cradle to the grave. This was not given very much consideration.
Mr. DOUGHTON. Mr. Speaker, I move the previous ques- Mr. SAMUEL B. HILL. The Black amendment, which
tion on the adoption of the conference report. is amendment no. 84. would have no place in the picture at
The previous question was ordered. all if it were not for the Clark amendment. It is an amend­
The SPEAKER. The question is on agreeing to the con- ment to the Clark amendment. It all goes together. You
ference report. cannot separate them,
The conference report was agreed to. Mr. TREADWAY. I realize It is an amendment to the
The SPEAKER. The Clerk will report the first amend- Clark amendment, but the Clark amendment itself stops in
ment in disagreement. the middle of page 56.
Mr. DOUGHTON. Mr. Speaker, I ask unan~limous consent Mr. SAMUEL B. HILL. If the Clark amendment should
that the amendments in disagreement, nos. 17, 67, 68. 83, fail there would be nothing at all to which the Black amend­
and 84, be considered en bloc. ment could attach itself, so it is so inseparably connected
The SPEAKER. Is there objection to the request of the with the Clark amendment that the two cannot be separated.
gentleman from North Carolina? Mr. TREADWAY. Mr. Speaker, is it not fair to inquire
There was no objection, whether or not the Black amendment, so called, should
The Clerk read the Senate amendments, as follows: not be further brought up in conference in order to
Amendment no. 17: On page 16. after line 17. insert the fol- straighten out what appears to be an unfortunate situation
lowing:yewh in the prohibition language that it carries? As I understand
1('7) Service performed In the employ of an employe woit, this prevents the director of any insurance company.
has In operation a plan providing annuities to employees which
Is certified by the Board as having been approved by it under being connected with any of these boards.
section 702. If the employee performing such service has elected Mr. SAMUEL B. HILL. I think the gentleman will agree
to come under such plan; except that if any such employee with- with me that you cannot find any status or excuse on earth
draws from the plan before he attains the age of 65, or if the frteBakaedetwtotteCakaedet
Board withdraws its approval of the plan, the service performed frteBakaedetwtotteCakaedet
while the employee was under such plan as approved shall be Mr. DOUGHION. I shall move that the House disagree
construed to be employment as defined In this subsection." to the Senate amendment.
Amendment no. 67: On page 45, line 2, Insert the letter "(a). ' WM.TREADWAY. That is my point; if the Black amend-
Amendment no. 68: on page 45, after line 9, insert the fol-metsolntgobc wihheCak mnd nto
lowing: Ietsol o obc ihteCakaedett
"(b) The Board shall receive applications from employers who conference.
desire to operate private annuity plans with a view to providing Mr. DOUGHTON. Certainly.
benefits in lieu of the benefits otherwise provided for in title II
of this act, and the Board shall approve any such plan and Issue a Mr. TREADWAY. If that is the situation, It Is entirely
certificate of such approval If It finds that such plan meets the satisfactory to me. Mr. Speaker, I understand now that the
following requirements: so-called " Black amendment " shall further be considered
"(1) The plan shall be available, without limitation as to age, by the conferees with the Clark amendment.
to any employee who elects to come under such plan: Provided,
That no employer shall make election to come or remain under Mr. SAMUEL B. HILL. No; We are considering it right
the plan a condition precedent to the securing or retention of now in conjunction with the Clark amendment, because it Is
employment, a part of that amendment, and you cannot separate the two.
"(2) The benefits payable at retirement and the conditions as It has nothing to which to attach Itself without the Clark
to retirement shall not be less favorable, based upon accepted
actuarial principles, than those provided for under section 202. amendment.
"(3) The contributions of the employee and the employer shall Mr. TREADWAY. The Clark amendment could be
be deposited with a life-insurance company, an annuity organiza- amended?
tion, or a trustee, approved by the Board. M.SME .HL.Cranynt ti ato
"(4) Termination of employment shall constitute withdrawal thM lrk SAMUEndmen. FMThe Cetlar amndmenIt wisath the
from the plan.th Clramnmn.TeCakaed ntwhte
"(5) Upon the death of an employee, his estate shall receive Black amendment constitutes the full Clark amendment.
an amount not less than the amount It would have received If the Mr. VINSON of Kentucky. Amendment no. 84 is in dis­
employee had been entitled to receive benefits under title II of areet h os a ihrt ge rdsge oi.
this act.agemn.TeHuehsetetoareodiareoI,
"(c) The Board shall have the right to call for such reports and I understand the motion of the gentleman from North
from the employer and to make such inspections of his records Caroilna will be to disagree to amendment no. 84, along with
as will satisfy It that the requirements of subsection (b) are teohraedet htaekon titysekna
being met, and to make such regulations as will facilitate the teohraedet htaekon titysekna
operation of such private annuity plans In conformity with such the "Clark amendment."
requirements. Mr. TREADWAY. If amendments nos. 82 and 83 go back
"(d) The. Board shall withdraw Its approval of any such plan to conference, would that include amendment no. 84?
upon the request of the employer, or if it finds that the plan or
any action tkaken thereunder fails to meet the requirements of Mr. VINTSON of Kentucky. Under the unanimous consent
subsection (b)." that was presented and agreed to.
Amendment no. 83: On page 55. after line 17, insert the following: Mr. TREADWAY. Eighty-four Is Inseparable from 82 and
"('7) Service performed by an employee before he attains the 83; therefore, it would go back to conference?
age of 65 in the employ of an employer who has In operation a Mr. VINSON of Kentucky. Yes; en bloc.
plan providing annuities to employees which is certified by the Mr. DOUGHTON. They are to be considered and acted
Board as having been approved by It under section 702. if the
employee has elected to come under such plan, and if the Coin- upon en bloc.
missiloner of Internal Revenue determines that the aggregate an- The Clerk resumed the reading of the Senate amendments,
nual contributions of the employee and the employer under such as follows:
plan as approved are not less than the taxes which would other­
wise be payable under sections 801 and 804, and that the em- Amendment no. 84: On page 88. alter line 12, Insr the Zol­
ployer pays an amount at least equal to 50 percent of such taxes: lowing:
Provided, That If any such employee withdraws from the plan .. S~c. 812. (a) it shall be unlawful for any employer to make
before he attains the age of 65, or If the Board withdraws its ap- with any insurance company, annuity organization or trustee, any
proval of the plan, there shall be paid by the employer to the contract with respect to carrying out a, private annuity plan ap­
T'reasurer of the United States, In such manner as the Secretary proved by the Board under section 702. If any director, offier, em-
of the Treasury shall prescribe, an- amount equal to the taxes Ployee, or shareholder of the employer Is at the same time A
which would otherwise have been payable by the employer and director, officer, employee, or shareholder of the Insurance comn­
the employee on account of such service, together with interest pany, annuity organization or trustee.
on such amount at 3 percent per annum compounded annually."- "(b) It shall be unlawful for any Person, whether employer or
Mr. REAWAY.Mr.Spekerbefre mendentno.insurance company, annuity organization or trustee, to knowinglY
84isread mRADAYI ask th eaierma offthe comenmintte no.8 offer, grant, or give, or solicit, accept, or receive, any rebate against
84 iasred,th aychirma ofthecomitte i 84the charges payable under any contract carrying out a private
is not a separate matter from the so-called " Clark amn-annuity plan approved by the Board under section M10.
men"?In
thr ord, t I te lac aen ment. As (c) Every insurance company, annuity organization or trus­
meundrtoodItotwer weres itoi thae uplfor coensdmeratio tAe tee, who makes any, contract with any employer for carrying out a
I unersood
e wee t,t hav upfor onsderaiontheprivate annuity plan, of such employer which has been approved
 1935 CONGRESSIONAL RECORD-HOUSE 1133
by the Board under section 702, shall make, keep, and preserve in my remarks on the bill when It passed the House 1 Included
for such periods, such accounts, correspondence, memoranda, pa- this opionaaprtfmyeaksadItsinheECR
pers. books, and other records with respect to such contract and il~lasapr fm eakadi si h zoD
the financial transactions of such company, organIzation, or trus- Mr. TREADWAY. Very good; I admit aUl that, and I still
tee as the Board may deem necessary to ensure the proper carry- say that the Attorney General's Department has failed to
ing out of such contract and to prevent fraud and collusion. All positively say they could support the constitutionality of this
such accounts, correspondence, memoranda, papers, books, and bl hscranyhsas enteattd ftejdca
other records shall be subject lit any time, and from time to time. il hscranyhsas enteattd fteJdca
to such reasonable periodic, special, and other examinations by authorities in the conference. There is no question about the
the Board as the Board may prescribe, very shaky position of the Judicial authorities that appeared
..(d) Any person violating any provision of this section shall bethohedabfrehecnres
deemed guilty of a misdemeanor, and upon conviction thereof shallthohedabfrehecnres
be Punished by a fine of not more than $10,000 or imprisonment Mir. CHRISTIANSON. Mr. Speaker, will the gentleman
for not more thal I year. or both."- yield?
Mr. DOTJGHTON. Mr. Speaker, I move that the House Mr. TREADWAY. I yield to the gentleman from Mln­
insist on its disagreement to the Senate amendments which nesota.
haveJustbeenreprtedby
te Clrk.Mr. CHRISTI4ANSON. If the Supreme Court should de-
have juTRbEenAY rep rtebypteaClerk. Idfe rfrnilcare this act unconstitutional and in the meantime If em-
mrto. TE WY.M.SekrIofeaprfrnilployers should liquidate their pension funds, then what will
The SPEAKER. The gentleman from Massachusetts offers happen to the empoyees who now receive protection under
a preferential motion, which the Clerk will report. private pension funds?
The Clerk read as follows: Mr. TREADWAY. They will be absolutely out ot luck.
r. ~zAWAY Mr Taanw
Preeretia nwionoffredby They will have neither one nor the other and there Is no
moves to recede and concur In Senate amendments nos. 17 67 usto aot ht
88, 83, and s. Air. REED of New York. Mr. Speaker, will the gentle-
The SPEAKER. The gentleman from North Carolina [Mr. Man TEDA.Iyield?
DoUGTONfois I hur.Mr.
econize REED of New York. And there are some 3,000,000
Mr. DOUGHTON. Mr. Speaker, I yield 10 minutes to the of them, are there not?
gentleman from Massachusetts [Mr. TRESDwwAy]. Wr. TREADWAY. As I understand it, the record shows
Mr. TREADWAY. Mr. Speaker, the motion of the gentle- there are 600 private pension funds in various business con­
man from North Carolina, tle chairman of the committee, cerns throughout the country, and as the gentleman from
means the taking out of the bill which is now under con- New York states, they employ in the neighborhood of 3,000,­
sideratlon the so-called "1Clark amendment." ooo people who will be absolutely deprived of the protection
My motion to recede and concur, which is a preferential for which they have been paying over a long period of years.
motion, means the inclusion of the Clark amendment. Mr. REED of New York. And 300 of those private con­
The failure to include the Idea in the Clark amendment in cerns have reserves of over $700,000,000.
the original bill and the failure of the House conferees to Mr. TREADWAY. Yes; and the Clark amendment calls
concur in the action of the Senate and include the Clark for the approval of the investment of these funds by the
amendment is another indication of the present-day inten- new Social Security Board. The Social Security Board abso­
tion of the administration to endeavor to control all busi- lutely controls the Investment of the private funds. The
ness procedure. It is another indication of the concentra- only thing It does not do is to take them away from the
tion in Washington in the hands of the present e~mnsr- private companies. There must be approval by this new
tion of control over business scattered all over this lad. Social Security Board of the investment of these private
The Clark amendment was adopted in the other body by a fuds
vote of 51 to 35, thus demonstrating its strong sentiment in Mr. REED3 of New York. And is it not a fact that many
favor of the purpose which the amendment seeks to accom- of these large concerns were pioneers in this field and had
plish. The proposition was fully discussed from all angles, to take a loss resulting from a long period of experiment in
and all the objections that can possibly be brought forth order to properly build up this system?
here were made there. Mr. TREADWAY. Not only that, if I may interrupt may
What is the intent of the Clark amendment? Simply to colleague, but when their business was poor and was not
permit business concerns that for many years have had pen- paying as they hoped It might, they nevertheless protected
sion systems of their own, contributed to by employees and their employees with this sort of fund.
employers alike or entirely by employers to continue this Mr. REE of New York. And is it not also a fact that
system without the penalty of additional taxation to support the benefits given by many of these comuanles are far
.some other people's employees; and if we fall to adopt the greater than what they will get from the Government?
Clark amendment we penalize these people to the extent that Mr. TREADWAY. I was expecting to refer to that very
either these private pension systems must be liquidated or feature. The Clark amendment provides that the benefits
else the employers and employees must contribute twice, from the private insurance funds must be as good or better
once to their own system and also to the Government than those provided for in this bill. Is not that correct?
system. Mr. REED of New York. That Is correct.
I do not want to ascribe any unfair ideas to the adnmin- Mr. WOOD. Mr. Speaker, will the gentleman yield?
istration. but I think this well mlustrates what we have been Mr. TREADWAY. I yield to the gentleman from his­
reading &,boutso frequently in the press in recent times of the sourL
desire on the part of those in control of the administration Mr. WOOD. The gentleman just stated that If this law
to create an attitude of hostility or opposition to our consti- were declared unconstitutional, the people who are now
tutional government. This is the question Involved here, covered by Private insurance funds would lose -the many
as I see it. We are treading on the thinnest kind of ice when millions of dollar they had paid in.
we paws certain features of this bill at all. We have not been Mr. TREADWAY. No; I did not say they would lose It.
able to secure from the Judicial authorities of the Govern- Those funds would be liquidated and not lost. However.
ment, the Attorney General or others, a definite opinion that they would lose the benefit of their anticipated retiremenA
this bill will be declared constitutional. annuities.
Mr. COOPER of Tennessee. Mr. Speaker, will the gentle- Mr. WOOD. The fact of the matter is the employers do
masn yield? not pay into these old-age pension funds operated by private
Mr. TREADWAY. Certainly, companies except by less wages.
Mr. COOPER of Tennessee. I am sure the gentleman winl Mr. TREADWAY. Oh, they do; the employers and em­
recall, upon reflection, that the Assistant Solicitor General ployees both contribute under one form and the employees
of the United States appeared before the committee in exec- only under another form. The gentleman is mistaken about,
utive session and presented an opinion of some 11 pages, and that feature
11334 CONGRESSIONAL RECORD-HOUSE JULY 17
Now, I want to refer to some features of this debate. Let under the contributory plan is $84 per month and the non..
me quote from the author of this amnendment-Senator contributory $59 per month.
CLARK. Senator CLAx said: Mr. KNUTSON. And the gentleman will recall a number
The purpose of the amendment Is to permit companies which of us In committee sought to have a simila provision incor­
have or may establish private pension plans, which are at least porated in the original bill.
equally favorable or more favorable to the employee than the MrTRAW .Imetodthtateopngofy
plan set up under the provisions of the bill as a Government MrTRAWY Imetodthtateopngofy
plan, to be exempted from the provisions of the bill and to con- remarks. This was brought up in committee and originally
tinue the operation of the private plan provided it meets the re- voted down, showing the desire, as I stated before, to place
quirements of the amendment and Is approved by the board set all this control of business in the hands of Government offi­
UP by the bill Itself. cials, who are inexperienced in business-and we know who
There is the gist of the Clark amendment. they are, we know who are going to control this proposition-
Mr. REED of New York. Will the gentleman yield? who have never had a bit of experience In business methods.
Mr. TREADWAY. Certainly. Mr. KNUTSON. Some of them hardly dry behind the
Mr. REED of New York. If it is not agreed to by the ears.
House. of necessity the private pension plans will either Mr. TREADWAY. Now for some of the advantages of the
have to be liquidated or the employers will have to pay private plans. More liberal benefits are paid. Employees
double rates. get credit for past service, while under the Federal plan you
Mr. CHRISTIANSON. The gentleman from Massachu- start in anew. Employees 60 years of age are provided for
setts is sure that the employers would not continue to con- under the private plan, whereas under the Federal plan they
tribute to both? are not. Annuities are paid in true proportion to earnings
Mr. TREADWAY. No; that is hardly to be expected. and service, whereas under the Federal benefit rate they are
Mr. CHRISTIANSON. If the Clark amendment is not arbitrary. Many private plans permit joint annuities, giving
accepted it means the liquidation of the fund, protection to widows, something not included here.
Mr. TREADWAY. I should assume so. Mr. Speaker, there is no abler man, perhaps, or better
(The time of Mr. TRAD~WAY having expired, Mr. D)OUGH- constitutional lawyer In the Senate than the Senator from
TON yielded him 10 minutes more.) Georgia [Mr. GzORGE]. Let me quote what he stated in the
Mrt. KELLER. Will the gentleman yield? Senate. He said:
Mr. TREADWAY. I yield. If the Court looks through mere form to the substance of this
Mr. KELLER. If these people pay double, they get dou- bill. I assert again that the question of the validity of the bIll la
ble service, one which no responsible lawyer would undertake to say io not In
Mr. REAWAY
Ohno;I bg th getlean'sparonserious question. Hence, why strike down, with the probably un­
Mr. REAWAY
Ob no;I bg te gntlean' padon costitutional bill, the private pension systems and private benefit
They would not get but one service, systems granting benefits to the employees of employers of this
Mr. CRAWFORD. Will the gentleman yield? country, embracing a large part of our population-why strik
Mr. Fora
REAWAY
qeston.those down when a bill is proposed which probably will not pan
Mr. CRAWFORD. Statistics will show how many of the hmutrothcote
600 pensions are holding companies? It seems to me the experience of the past few weeks in
Mr. TREADWAY. Oh, I do not know anything about getting decisions on the constitutionality of legislation that
that. has been passed by this Congress and the previous Congress,
Mrt. CRAWFORD. If the question should arise and these ought to be a caution, an SOS signal to the people who
were holding companies and they should be decentralized, are forcing what Is undoubtedly In the opinion of man
then what would be the status of the employees-those In- able lawyers unconstitutional legislation In the Provisions Of
sured? Assuming that they are not holding companies, this act.
what would be the status of the employees at ny time? The employees are fully protected under the Clark amend­
Mr. TREADWAY. Those assets are in a separate fund, ment. Private plans must be available to all employees
entirely separate from the business carried on by the com- without regard to age. Employees may elect whether they
pany. They are under the approval of the new Security will come under the Federal or the private plan. Benefits
Board. under the private plan must be equal to or better than the
Mr. CRAWFORD. The amount deposited would be, but benefits under the Federal plan.
would they not at that point be in the same status as at Contributions under the private plan must be deposited
the present time, when it is proposed to liquidate them, in with life insurance companies, annuity organization, or
the event that this amendment does not carry? trustees approved by the Social Security Board. Termina­
Mr. TREADWAY. If these companies are liquidated and tion of employment, whether voluntary or involuntary, con­
you are an employee of one of these private corporations stitutes withdrawal from the private plan. Upon an em­
you would receive your pro rata share in the liquidation, ployee's withdrawal from the private plan the employer
but you would have no further protection under that private must pay to the Federal plan an amount equal to the taxes
system for your old-age Insurance, which now you would otherwise payable by the employer and the employee, plus
have. 3-percent compound interest. Upon death of the employee
Mr. THURSTON. Mr. Speaker, will the gentleman yield? his estate shall rec.eive not less than the amount it would
Mr. TREADWAY. Yes, have received under the Federal plan.
Mr. THURSTON. Is there any provision in the bill which The Social Security Board may at any time withdraw Its
would defer liquidation of these plans until the bill is de- approval of the private plan if it fails to meet its require­
clared constitutional? ments. No inancial advantage will accrue to employers
Mr. TREADWAY. No. The adoption of the majority who may be permitted to retain their private pension sys­
motion to Insist upon disagreement and strike out the Clark tem, since they are required to contribute to the private
amendment, as I say, sets up the situation which the gen- plan not less than they would pay under the Government
tleman from Minnesota [Mr. Cgml xsAwsoN1 Just referred Plan. For this reason, the continuation of the private pen­
to. You Wil either pay double or you are out of luck. As sion plans will not result in the discharge of the older em­
I1said in answer to a question of the gentleman from New ployees, as some contend.
York [Mr. REED] there are 600 of these Private-plan insur- So far as this argument Is concerned. I might add that a
ance boards in operation, covering 3,000,000 employees, private pension plan -would cost the employer far more than
Three hundred of these covering a million employees are on the amount of taxes he would- otherwise pay to the Federal
a reserve basis, with over $700,000,000 of reserve, and still, Government. His chief interest in having a more liberal
without the Clark amendmqnt, we are forcing the liquida- plan is to provide for his relatively older employees. If he
tion of those companies, expected to discharge these older employees he would not
Approximately 150.000 employees are now drawing pen- be asking to have his private system continued. The sin­
sions under private plans, and the average of those who share cerity of the private employers Is demonstrated by the ladt
1935 CONGRESSIONAL RECORD-HOUSE 1133
that they are now voluntarily paying pensions to about or 40 years. So we borrow the money from the money that
150.000 superannuated employees, they pay in, in order to pay these benefits to the older men
The argument that the adoption of the Clark amendment who are retired after a few years' work. Only in that Way
will cause titles II and VM to be held unconstitutional is can we finance the fund. If we do not have that financial
based upon the theory that it link the two titles together support for the fund, then we would have to go out and levy
and discloses their true purpose, general taxes to put into the Treasury to pay this money.
As a matter of fact, it has been recognised all the time In the course of a few years it will amount to more than a.
that titles II and VIII are tied together, and must be so billion dollars a year paid out In benefits. So that the bill,
regarded by any court passing judgment on them, as it left the House financed itself by the young men carry­
Other provisions or these two titles link them together, such ing, for the first few years, the fund out of which the bene­
as the sections setting forth those who are neither subject to fits are paid to the older men, thereby saving the Federal
the taxes or the benefits. Hence the Clark amendment itself Treasury the necessity of going out and levying general
would not make titles IIE and VIII unconstitutional, taxes to supplement the Treasury funds for the purpose of
The Purpose of this bill is to provide security for the aged, financing these benefits.
and the Clark amendment permits private employers to make Now, what does the Clark amendment provide? It pro­
more abundant provision for their employees than the Federal vides that the employer, whose employees so choose, may set
Governmnent proposes to make. up an independent pension reserve or benefit system, and
The private companiy method, as included in the Clark be relieved from participation in the contribution to the
amendment, is better for the employees of those 600 com- Federal plan. It means that whenever all of the employees
panies than is the Federal Government system proposed to of a private industry chose to go under a private plan, they
be set up in this bill, as to which you are taking a great may contribute to a fund set up by the private industry. and
chance of a decision that it is entirely unconstitutional. If no part of that fund shall go into the Federal Treasury. It
the private pension plans are broken up by this legislation, means, of course, under the provision of the Clark amend­
and the Federal pension plan is later invalidated, the ment, that the employer and the employee must pay Into
3,000,000 employees who are now covered by the private plans that private fund an amount equal to that paid into the
Will be without any protection. In other words, they have Federal fund by others who are not under a private plan.
everything to lose and nothing to gain under the 'Federal It means that when a worker withdraws from a private plan
plan. the employer must pay into the Federal Treasury on his.
I hope, Mr. Speaker, that the Clark amendment will be behalf the amount of tax previously paid on his account into
adopted and that the motion I made to recede and concur the private fund, plus 3-percent interest compounded.
will be the action of the House when the vote comes upon It means that in the case of the death of an employee
It. !Applause.1 under the private plan his estate will receive the same
The SPEAKER. The time of the gentltman from Massa- amount of money from the private pension plan as It would
chusetts [Mr. TREADwAY] has expired. receive from the Federal pension plan, and that is the
Mr. DOUGHTON. Mrt. Speaker, I yield 10 minutes to the amount the employee himself has contributed plus 3-percent
gentleman from Washington [Mr. S~AsuEL B. HIL. interest compounded annually. It does not mean that his
Mr. SAMUEL B. H-1ILL. Mr. Speaker, I think it would be estate will get what the employee has contributed plus what
well to see just what this act, in its original form, provided the employer has contributed, but only the amour.C the em­
for unemployment compensation, and then to examine the ployee has contributed, and that is the same amount the
Clark amendment and see how one fits into the other or estate would receive under the Federal plan. But here Is
whether there is conflict between the two, the difference: Under the private plan the employer keeps
The act as passed by the House provided for a Federal whatever the employer himself contributes to the private
plan to be financed by the levying of taxes upon the em Plan. Under the Federal plan the amount the employer
ployer and upon the employee measured by the pay roll, contributes goes into the Federal 'Treasury to finance the
This money was to be put into the Federal Treasury. it general compensation fund. It means that under the Clark
was tio enable the Federal Treasury to finance these old-age amendment it would be to the financial advantage of the
benefits. If the money were not obtained in this way, weInutymianngscplnoepoynyyugmn
would have to levy other taxes to provide revenue out of and not to employ old men, to keep in their employment
which to finance the old-age benefits. The act; as passed young men, and as men reach middle age to discharge them,
tht amanreahin th age of 65 because the companies make their money, they earn their
by te Huseproide
years and having been employed for 5 years or more under benefit fund, from the contributions of the younger men,
employment that comes within the provisions of the act may Mr. Speaker, my time is exhausted and I shall be unable
at the age of 65 and thereafter receive a certain monthly to discuss further the Clark amendments and the reasons
payment called a benefit's or " annuity."~ It is evident to why they should not be adopted. However, under leave to
you that a man in middle life or approaching old age, who extend my remarks I submit for the RECORD in support of my
works for 5, 10, or 15 years at an average salary, winl not contention that the so-called " Clark amendments"I would
have been able to contribute by his own contributions and totally wreck and destroy the unemployment-compensation
by the contributions of his employer in his behalf a sufi provisions of this act, this memoranda prepared for me giv­
cient sum of money to finance the annuity to such retired ing- an analysis of the so-called " Clark amendments"- and
worker; but under tUe provision of the act no retired worker their effects upon this legislation:
will receive less than $10 a month, regardless of the fact H3OW THCECLARK ABIENDMZT WOULD WORK OUT
that he may not have earned in the annuity fund more 1. Under the Clark amendment existing private-pension plans
than $1 a month or even less than $1 a month. He will would either have to be abandoned or fundamentally altered,
get nn10anuityof
get $1
o aamont
anuiy ont if ithiFthi
If ee cmeswitin
cmes histheClark debate It was
omhtheamendment underevident that manythat
the Impression Senators voted for
its adoption is
provision and has worked 5 or 10 years only, necessary to save the existing private-annuity Plans. It was not
Under that provision we are paying to that man an un- appreciated that all private-annuity plans will have to be radically
earned benefit. We are going down into the Treasury to altered even with the Clark amendment in operation, ThuisnI
get heha one no thtben cntrbute totheTres-true for the following reasons:
get he
hs one nt thtben cntrbutd t th Tras- (a) None of the existing plans provides for repaymcnt of the
ury on his behalf, which money must come out of the gen- entire amount contributed in behalf of an employee upon his
eral fund of the Treasury, paid in there from tax levies, withdrawal from employment. The most liberal of these plans
But we have young men and men in middle life Iin this Provide he has for the return
contributed, to the
with withdrawing
Interest, Under employee
the Clarkof amendment
the money
category of employment. The young men contribute, to the the employer will have to pay back taxes with interest, for aul
fund and their employers contribute to the fund for them, withdrawing employees, which, under the assumptions on which
for a period of 20, 25, or 30, and sometimes 40 years. That this amendment Is based will be equivalent, on the average, to
mone
te Trasuy.
gos ino hoseyoug me ~ i~trepayment of the contributions of both the employer and the
monehe gosreaury.Thoe
ito yungmenaienotemployee with interest. The Clark amendment thus places an
drawing mone out of the Treasury during those 20 or 30 -AdAmnsl burden on tihe existing private-annuity plans and thi&
 11336 CONGRESSIONAL RECORDL-HOUSE JULY 17
wni necessitate recalculation of their actuarial basis, with either the older workers will not equal the benefits paid to them, while
Increases In contributions or reductions In benefits. the taxes paid on the earnings of the younger workers will exceed
(b) All existing plans allow annuities only after employment for these benefits. Consequently, through covering a large percentage
a relatively long period of time-a majority of them for periods of the younger employees In the private annuity plans, the fnasn­
of 20 to 25 years. Such plans certainly cannot be regarded as cial basis of the Federal system will be wrecked. The benefits pro­
being as liberal as the Federal old-age-benefit plan. They will, vided for the older workers can In that event be paid only through
consequently, have to be revised in this respect. This will again Increases In the taxes upon employers who remain within the
affect the financial basis of these plans and necessitate changes system or through large governmental contributions.
In contribution rates or benefits. -The same effect is produced through the fact that under the
(c) Many of the existing plans have no reserve or only very Clark amendment the Federal plan will not get the advantage of
inadequate reserves. Many more are not Irrevocably funded, the employers' contributions in the event of the death of ema­
(d) Many plans do not pay as liberal benefits on retirement ployees before reaching age 65. This will affect approximately 75
as does the Federal plan, even to employees who have long been percent of all employees who will be brought under the private
with the company. Few. if any, plans pay as liberal benefits annuity plans, and will cause an Immense loss to the Federal system.
for employees who are with the company only for periods of 6. This amendment will greatly Increase the difficulties of
less than, say, 20 years. administering titles VIII and 1U.
The changes which the Clark amendment will necessitate In Under the amendment not all employees and nost all employers
private annuity plans are extensive and fundamental. Without of plants having approved private annuity plans will be outside of
the Clark amendment most employers, as a practical matter, will the Federal system. Employers will have to pay taxes on those of
wish to reorganize their annuity plans, although they are not their employees who are not under their private annuity plan.
legally compelled to do so. But it will be no more difficult to Without private annuity plans, the tax collection Is quite simple,
reorganize existing private plans to give benefits supplemental to as the Treasury has to pay attention only to the total of the
the Federal plan than it is to revise these plans to conform with employer's pay roll. Under the Clark amendment It will have to
the Clark amendment. check the Individual employees on the pay rolls. Immensely
2. Under the Clark amendment it will be of advantage, both to Increasing the difficulties of collection.
the older employees and to the employers, for present older em- Other difficulties result when employees leave the employment of
ployees to come under the Federal old-age-benefits plan, while the an exempted employer or otherwise withdraw from his private plan.
younger employees will be covered by the private annulty plans. In that event back taxes have to be paid, and these may be due for
The annuities payable under title II are a percentage of the many years. This involves going Into all pay rolls during the
earnings of the employees after the taking effect of the Social period while the withdrawing employees were with the plan.
Security Act. The percentage of the earnings on which the an- assuming that such pay rolls have been preserved. There Is noth-
nuities are based Is materially greater where the total earnings Ing in the amendment, however, to require that the pay rolls shall
are small than where they are large. be kept any particular time, and if pay rolls are no longer available
Present older employees will have small total earnings because It will be still more difficult to ascertain the back taxes that are
they will be under the system but a few years. They will conse- due. The great majority of all employees who come Into the em­
quently get much larger benefits than their own contributions ployment of an exempted employer are certain not to remain within
and those of their employers would buy from Insurance companies. the employment until age 65, so that this problem of computing
All private annuity plans are constructed on precisely the oppo- the back taxes will be one which will recur In many thousands
site principle. Most of them give no benefits at all to employees (perhaps millions) of cases annually.
who have not been In the employ of the company for a very long 7. Only relatively large plants can set up private annuity plans.
period of years, most commonly 20 to 25 years. None of them
favors employees who are under the system but a short time. Of the employees covered under existing private annuity plans,
Under the Clark amendment the employees may elect whether 30 percent are with companies that have over 100,000 employees; 70
they wish to come under the private annuity plan or under the percent with companies having over 25,000 employees; and 98 per­
plan of Federal benefits. Since the social-security bill gives such a cent with companies having over 2,000 employees. A small em­
distinct advantage to employees who are in the system only a ployer cannot take advantage of the-Clark amendment. It is one
short time-as will be at present all employees now past middle which In practice will be a special privilege to the large employers
age-it is very evident that these employees will elect to come only.
under the Federal plan. It Is to their own Interest, as well as to RESPECTrS IN WHzCH THE CIARK AMENDMENT XSREETREMELT VAGUZ
that of the employer, that they should do so. Under the circum- 1.I is not clear in this amendment whether the private annuity
stances It is almost certain that substantially all employees who -g eI
are past middle age when the Social Security Act takes effect, or plans must be as liberal as the system of Federal old-g bnefits
whena nw pivae
anuit pln I inuguatedIn he utue, illunder title II of the Social Security Act for all employees, regard­
whena
anuit
nw pivae
pln i inuguatedin he utue, ill less of age or length of employment, or only whether the plan must
come under the Federal system while the younger employees willonteargeiv slbaleefsashsepvddudr
be covered under the private annuity plan.onteaeaegvaslbrleefsashsepvidude
3. Under the amendment It will he to the advantage of the title II.
employer to hire only men In the younger age groups. This Is a very important point. A private annuity plan may very
It needs little explanation that the contributions can be less to well give more liberal benefits than the Federal plan for the great
pay the same annuity to a man who remains in an annuity system majority of employees and yet give no benefits ht all, or very Inade­
a long number of years than to one who remains in the system but quate benefits, to the older employees and those who are with the
a few years. The l.ost of an annuity of $i per aninum, beg nm n company only a very short time. Most of the existing plans give
at age 65. purchased at Insurance company rates, Is approximately benefits only to employees who have been with the company for
*1.8622 at age 22; *2.1827 at age 27; *4.2710 at age 47; *6.4757 at 20 to 25 years. To such employees more liberal benefits can be
age 57. given than under the Federal plan, and yet the effect of such a
With such greater costs for older-age groups, It Is very evident private annuity system would be to dump all of the relatively
that an employer can provide beniefit~s as liberal as those of the short-time employees on the Federal system, and It Is for these em­
Fedeal
muhlanat
loer ost Ifhe ursus te plic ofployees that the annuities under the Federal plan are most costly.
Fedralg pnlanmat anmuhe lower-g crost, s.hEmpursuers the polic ofv 2. There Is no requirement that the contributions to the private
hoiringaonl emenoee wnhenlower-g groups.d Empoygerhs adonothave annuity plan must be Irrevocably earmarked for the payment of
AUtodshargteyemploee whenI theytagrow oldowge hisn advanimtage pensions or that pensions once granted must be continued through­
Many employers now have such low hiring age limits. The Clark ottelf ftepninr
amendment will very materially Increase the tendency toward the The amendment provides that the contributions must be de­
adoption of such hiring age limits, posited with a life-insurance company, an annuity organization,
4. Employers with private annuity plans will derive great finan- or a trustee approved by the Board. There Is nothing to prevent
cia advantage through all deaths of employees before reaching the employer from terminating his plan at any time; in fact, It Is
retirement age. provided that the board shall withdraw Its approval of a plan
Approximately 75 percent of all persons entering Industry, die whenever the employer so requests. When this occurs, there Is
before they reach age 65. which is the retirement age In title I,~ nothing to guarantee 'that employees already retired will continue
and under most private annuity systems. Wheniever an employee to receive their pensions. The employer must pay back taxes for
dies, his estate is to get, under the Clark amendment, at least as the employees then In his employ, but any balance remalinin In
liberal benefits as under title II1. Under title UI the benefits pay- his fund belongs to him.
able on the death of an employee will on the average equal the 3. No control Is vested In the social security board over con­
contributions made by the employee himself, with 3 percent in tracts which the life-insurance companies, annuity organizations,
terest. The estate will not get back the contributions of the em- and trustees make with employers maintaining private annuity
ployer. In the Federal system the saving which thus results goe Plans.
to the employees who survive until they reach retirement age.. The provisions of these contracts are very material for the ade­
Under the Clark amendment this saving Will go to the employer. quate protection of the rights of the beneficiaries, but It la at
5. The Clark amendment will wreck the finantial basis of the least doubtful under the amendment whether the board can
Pederal system. refuse to approve a life-insurance company, an annuity organiza­
The taxes collected under title VM of the Social Security Act tion. or a trustee because it does not believe that the contract
Will In over a long period of time equal the benefit payments that made with the employer adequately protects the employees.
will have to be made under title U1. This actuarial balance, how- 4. No safeguards are included which will make It certain that
ever, will be possible only on the assumption that all industrial the Government will be able to collect the back taxes which
workers will be brought within the Federal plan. As has been become payable upon withdrawals from the plan or Its complete
noted above, the Clark amendment will operate to take out of the termination.
Federal plan many of the younger Industrial workers, while it will Withdrawals will occur In a majority of all cases, snlemos
give an excessive percentage of the older workers to the Federal employees do not remain with one employer throughout their
system. Under title II the taxes paid by and for the beneflts of entire industria life. Likewise, there will be numerous Instances
 1935 CONGRESSIONAL RECORD-HOUSE 11337
In which employers who have established private annuity Plans AxLoWtmG TRU ADOPTON OF 2MM CLARK AN DMm= WOULD SESULY
will go out of business or for other reasons discontinue their plans. ng AN ULTIMATE COST Or 31WONS OF DOLLARS TO TEN FZZ2
For these reasons. it is certain that employers will have to pay aovwRNszsN
large amounts In back taxes. There Is no provision In the a~mend-. To pay benefits scheduled under utite II to those who Will be
ment under which employers are required to set up reserves for entitled to benefits during the earlier years of the Federal annuity
the payment of back taxes. The annuity fund must be deposited system, the Federal Government will deliberately incur a huge
with a life-insurance company, an annuity organization, or a deficit of many billions of dollars. This is chiefly because the
trustee, but there is nothing in the amendment which provides older workers will receive In annuities much more than the total
that the annuity fund shall be available for the payment of back taxes paid by them and by their employers on their behalf.
taxes. Further, an annuity fund may be exhausted and no money The plan Is so designed, however, that this huge deficit Is
May be available for the payment of back taxes. gradually wiped out by the profits the Government Will make on
L FuRTHE5 COMMENTS ON THE MLADE AMMNDMENT the annuities of younger workers. The deficit will be eliminated
I. The Clark amendment provides adverse selection against the because the tax paid by the employers of younger workers and
Federal system. While the requirement that the employer and by the younger workers themselves will more than suffice to pay
employee pay an equal amount of taxes into the private fund the benefits to these young workers.
Prevents the employer from reducing his payments below the For example, take the case of a young worker, earning $100 per
level of the taxes, nevertheless, It Is almost certain that the Gov- month and entering the system in 1949, at 24 years of age. The
ermient fund will be loaded with all the older employees and find profit to the Government from his contribution of $36 per year
It impossible to pay the scale of benefits specified out of the taxes and his employer's contribution of $38 per year, will be $24 per
provided In title VIII. When a deficit occurs In the future, the year. because the gum of $48 per year would be enough to pur­
rates in title VIII will have to be adjusted upward or the Gov- chase the benefits which he will receive under the bilL
ermnent will have to subsidize the system out of general-tax Suppose there are 5.000.000 of these young workers ultimately
revenues, absorbed In private pension plans. The Federal Government will
2. As was pointed out In the debate on the Door of the Senate, annually lose $24 for each such worker In these private plans, or
this amendment seriously threatens the constitutionality of title $120,000,000 per year. This is part of the profit which was cal­
VIII. This exemption Is wholly different from the other exemp- culated to offset the deficit Incurred In the earlier years of the
tions In the title. It taxes employers who fail to set up an plan and to make the plan actuarially sound. The loss of this
approved annuity system and falls squarely under the language of profit would make It necessary, for the Federal Government to,
the Supreme Court In the Child Labor Tax case holding the So- make up this sumn from other sources in order to meet Its obliga,­
called "tax" In that law a penalty because "it provides a heavy tions under title IL
exaction for a departure from a detailed and specified course of J. B. Oxwm,w
conduct of business." Fellow of the Actuartoj Society of America, Fellow of the
In order to save title VIII from being held unconstitutional. It American Institute 01 Actuaries, PeZlow of the Casuanlty
would appear Imperative either to throw out this amendment alto- Actuarial society.
gether or to change It from an exemption of the tax to a payment M.DUHO.M.Sekr il 0mntst h
In title II1to such employers. M.DU~M .M.Sekr il 0mntst h
3. There is nothing in the Clark amendment which will effec- gentleman from Maryland [Mr. LzwIs].
tively prevent employers from placing all their older employees on Mer., LEWIS of Maryland. Mr. Speaker, I must begin by
the Government fund and retaining in their own fund the younger confessing that I have little to contribute after the discus­
employees. They could even cause employees to change from
one fund to another at any future time, If such change became sion we have had by Congressman Hna. except my deep con­
advantageous to their own fund. For example, If one of their em- viction of the ill wisdom, indeed of the very destructiveness
ployees were due to retire within a Short time, and the contribu- of the Clark amendment. I am not alone In this opinion.
tions paid in on his behalf were less than the actuarial equivalent
of his annuity rights, he could be Induced to elect the Government May I give you the advantage for a minute of the result of a,
system. It is almost a certainty that private employers in the comprehensive and responsible study of the whole subject of
future would keep In their own fund only those employees who Private industrial pension systems? Observe these two large
would be profitable to the fund. In this Way these employers andvoue entitled " Industrial Pension Systems." These books
their younger employees would shirk all responsibility for the oldervoue
employees-even those within the employment of the particular represent the investigation of an economist and statistician.
fund. Obviouslv this will have to be corrected. Dr. Latimer, who undertook this work, just published in 1933,
4. Under the Clark amendment, practically every employee Of a at the instance of the Industrial Relations Counselors, Inc.
private employer having an approved retirement plan would be This board's purpose, so far as I can gather, would resemble
entitled, when he retired, to draw two benefits--one from the
private plan, one from the Government for employment other than in a general way the Brookings Institution, with whose con-
under such employer. Practically no employees would have worked tributions you are doubtless familiar. Its membership con-
for a single employer for a lifetime. This would result in these sisted of Rayn .nd B. Fosdick,, chairman; William D.Rc­ B. Dixon;
employees drawing larger benefits than they would be entitled toEretMHokn;CusM orikJr:oh
if they were under only one system. For example, suppose an Ens LHpis yu comcJ. onD ok~
employee with an average salary of $1,000 annually were employed feller, 3d; Arthur Woods; and Owen D. Young.
for 10 years In employment under the Government fund and 10 Now, let me read the conclusions of this very eleborate
years under a private plan just before retirement. He would be and responsible study:
entitled to receive a monthly benecft of $20.83 from the Govern­
ment and an equal amount from the private plan, making a total By and large the bulk of industrial pension plans in the United
of $41.66 a month. But If he had remained continuously under States and Canada are insecure; first, because of inadequate financ­
either the Government or the private plan, he would be entitled ing; second, because of lack of actuarial soundness, even In those
to draw a monthly annuity of only 829.17. In other words, this cases where some funds have been provided. third, because of fail­
employee would receive a pension of $12.49 per month greater than ure to provide proper legal safeguards both In connection with
he would otherwise be entitled to. This would constitute a heavy funds and with the preservation of rights for employees; and,
drain upon both funds. The private employer may escape such fourth, because of the absence of definite administrative procedure
extra cost by refusing to employ older persons, who have been for carrying Out the terms of the plans. Unless the policies pur­
previously employed with other employers, but the Government sued by most companies at the present time are changed, there is
cannot so protect Itself. not much hope for improvement (p. 902).
The results which will Inevitably flow from this defect will be And then a sentence which appears a little farther on in
the absolute refusal of companies with private plans to employ tiebook
older or even middle-aged workers, except under the conditionth
that they elect the Government plan. This will be difficult to do. The voluntary, provision of complete old-age security by Industry
It is prohibited In the law, and the employee will recognize that under a business eimnomy in which the criterion of success and
it is to his advantage under the circumstances to elect the prl- the condition of continuous existence Is profits, inevitably involves
vate plan. The result will be a refusal by the employer to take Inescapable contradictions (p. 945).
on any but very Young employees.
5. The Clark amendment provides a very great incentive for Mr. COLE of Maryland. Mr. Speaker, will the gentleman
employers with Private plans to employ only younger persons and Yield at that Point?
to discharge their older employees. By escaping their just shr Mr. LEWIS of Maryland. I yield for a very brief question.
of the cost Of- annuities for the older persons, such employers in
*thefuture will be able to pay much larger annuities than provided Mr'. COLE of Maryland. As I understand the Clark
In the Government plan. It Is well known that in the long run amendment, it subjects all private retirement systems, both
retirement allowances become a component part of salary. The as to conditions of retirement supervision and the invest­
larger the retirement allowance, the lower the salary which is ment of the funds to the board created under this act.
necessary to pay to retain employees. This Is well known. Many
Ilustrations could be cited. Employers with private plans will Mr. LEWIS of Maryland. That is true, but the fact lacksg
profit almost as much by being able to pay larger benefits as If significance. Such control is of nominal value only after
they were permitted to reduce their oontributlons. these interests have been allowed to chisel in and appropri­
Under further leave to extend I here submit, as part of ate the low-cost employees, leaving the high-cost employees
my remarks, the following statement by J. B. Glenn: on the Government fund.
11338 CONGRESSIONAL RECORD-HOUSE JULY 17
If anybody in the United States can speak on this subject would apply only to a company found conducting such a
with an assurance of sincerity and, indeed, with a high system on the Ist day of January 1935 and in successful
degree of guaranteed knowledge, it is the president of the operation for a number of years, which, on qualifying with
American Federation of Labor. In a circular letter received the Board, might be treated as an exemption. (Applause.]
this morning, I find him stating: [Here the gavel fell.]
Labor is very much exercised over this amendment, as it exempts
private annuity plans conducted by employers. Anyone who is well
acquainted with the reasons for creating these private annuity
plans and the suffering that follows could not for a moment
approve that amendment.
I jump several paragraphs of his letter:
Now, therefore, in the name of the organized wageworkers of the
United States, as well as those unorganized, I wish to appeal to you
to vote against Incorporating In the social-security bill the Clark
amendment.
Mr. VINSON of Kentucky. Mr. Speaker, wili the gentle­
man yield?
Mr. LEWIS of Maryland. Yes.
Mr. VINSON of Kentucky. The gentleman has given
much thought to this subject. I wish he would discuss, if he
will, the effect of the Clark amendment on persons 45 years
of age and over.
Mr. LEWIS of Maryland. It is perfectly apparent in
entering into any annuity system like this, Mr. Speaker,
that those who enter early would need to pay but a very,
very small annual subscription to build their annuities pay­
able to them 30'or 40 years later. In the complete wage-
annuity system provided by this bill it is also perfectly ap­
parent that those who enter it older would have to pay
much larger subscriptions. The bill provides a flat rate of
subscription on all to build a fund adequate to take care of
young and old.
Under the Senate amendment the employer by " contract­
ing out " with insurance companies could get much lower
rates for young employees, with the result that young per­
sons would be preferred for employment. They attempt to
meet this self-evident objection by referring to the following
proviso in the amendment:
Provided, That no employer shall make election to come or re­
main under the plan a condition precedent to the securing or
retention of employment.
I pronounce this the grand mockery of our age, that the
employees are to have the right to elect, forsooth, under the
amendment.
Does anybody believe for a moment that it would confer a
real power of election upon the laborers of the United States?
I have labored myself for many years. There never was a
moment in all of my experience when I had the election as
to any condition of my employment; and none will be effectu­
ally carried here. I do not complain. Doubtless my em­
ployers felt they had to have uniform rules, but they made
them, and they left me no election. The youngsters now are
already under a high preference. You know about the age
limit of employability at 45. The youngsters already under
preference are going to have their preference magnified.
Because as. they may cost the employer but 1 percent on
wages while the older case 3 Percent the older ones are going
to be dismissed at the gate.
Mr. Speaker, the working men and women over 45 years
of age are already under a deathlike discrimination in the
United States today. I had occasion to state the other day
that we had started a new class in America, which I christen
"America's untouchables."
They are the men, and who without a day in court are
rejected and dismissed at the gate because they are 45 years
of age. Would you add by this amendment an additional
inducement to competing employers to accentuate this mon­
strous evil even as against those who are now employed? If
we cannot do Justice to them, let us Pity, at least, these old
men and women who are thrown on the scrap heap by indus­
try because their arms are no longer strong enough or swift
enough to turn its great wheels in the competitive struggle.
This is not an amendment intended to reward pioneer em­
ployers who, on their motives of humanity, had organized
their systems. It that were the motive of the amendment1 , it
11340 CONGRESSIONAL RECORD-HOUSE JULY 1-7
The particular reason for my objection to the amendment
is that it initiates the Federal system with the worst possible
obstacle that we can put in its path. Ever since the creation
of the State and private systems there has been a necessary
tightening up on the part of industrialists in regard to the
appointment of men over 40 years of age. It is a pathetic
state to have a constituent of the age of 40. 45, or 50 call on
you and tell you his tale of woe as to how he tramped from
one industrial plant to another pleading for work, only to be
.denied the opportunity because his employment would put an
increased load on their retirement system. Therefore, for
the sake of the aged who are the primary objects of this bill,
we ought to eliminate the Clark amendment, and give the
Federal system a most appropriate opportunity to display Its
relative merit.
May I say one other thing from the record? Only 4 per­
cent of the men who are covered by private systems are even­
tually retired by such systems. Recurring seasonal and cycli­
cal depressions find the aged laid off first., The youthful
employees are returned to work first, and in many Instances
the aged are permanently separated from their jobs and their
pensions. Under the Federal system it makes no difference
whether you are 20, 40, or 60 years of age, the cost is uniform
and does not vary. It would be just as advantageous for
an employer in a private plant to employ a man 40 as it
would to employ a man 20; but under the system permitted
by the Clark amendment it would be to his distinct advan­
tage to employ younger men and to discharge older men.
That would be the result of a dual system of pensions,
Private pension plans will have the youth of the country
enrolled in their systems, and as men become aged they will
have to find a haven of refuge In the Federal plan, and
therefore we will be spending more money; we will have the
most difmcult class to protect, and the private pension plans
in protection of their own systems will constantly load the
Federal system with the aged workers of the country.
I plead not so much for the pension plan as I plead with
you this afternoon for the aged workers of our country, and
I say to you, no matter what promises may be made by the
proponents of this amendment, the history of our experience
with the industrial pension plans during the last quarter of
a century indicates that the aged have been penalized and
have been taken out of permanent employment and cast
upon the scrap heap of life there to depend upon the charity
of the Government. Therefore, in justice to the aged and
in justice to this plan that we are initiating, let us vote down
the Clark amendment and give some hope to the aged, the
tragic victims of this machine age. [Applause.]
Mr. DOUGHTON. Mr. Speaker, I yield 5 minutes to the
gentleman from Wisconsin [Mr. SAuT~onl.
Mr. SAUTHOFF. Mr. Speaker, I am opposed to the Clark
amendment and I trust that the motion now before the House
will be voted down.
The main factor for any concern or any employer In con­
sidering what particular annuity system he Is going to adopt
Is the cost of the system. The two prime factors In creating
cost are, first, the age of the employee, and, second, the wages
of the employee. If it is to be within the control of the pri­
"ate employer what system he is to adopt, naturaliy he is
going to try, to reduce these two factors so as to make his
cost less by, first, cheaper labor, and, second, younger em­
ployees. In this way he can shut out the higher paid labor
and he can shut out the older men in the industry. This is
exactly the same thing that has been worked, and Is being
worked today, by department stores and chain stores in the
hiring of girls. They hire them on a graduated-scale system.
If you work 5 years, you get a raise in pay; If you work 10
years, you get another raise in pay; if you work 15 years, you
SOCIAL-SECURIT DILL, 1935 get a third raise in pay; but before they get to the 10-year
Mr. DOUGHTON. Mr. Speaker, I yield 5 minutes to the period they are let out, and a new crop is constantly coming
gentleman from New York [Mr. MPAy l. in. Automatically they are debarred from higher increases
Mr. MEAD. Mr. Speaker, I am very much concerned in pay. Fire them and you are rid of them. This Is the
with this amendment, and, as one who has been closely iden- answer, and when these girls go out to seek other jobs In
tifled with industrial pension plans, I trust that this House other places they cannot find them. As they grow older It
will instruct the conferees to reject the so-called "Clark becomes Increasingly more dimfcult to secure work. and thereby
amiendment, Inceases uepomn
1935 CONGRESSIONAL RECORD-HOUSE 11341
Besides thiese two main factors, age and wages, there are encourage discrimination against the older employee when
some other factors which appeal to me and which I hope you he seeks either employment or reemployment.
will consider. one of these is when an employee quits and No plan can be actuarially sound unless all the employees
gets a better job, or when he Is let out and finds other employ- in that industry, both young and old, come under one plan.
ment, he starts paying in on his new job, but what happens and unless all of those employees contribute to one fund.
to what he has already paid In on the old job? In many in- Under the Clark amendment it would be permissible to
stances, in fact in most instances, these private systems are have not only a private annuity fund. but likewise a portion
under trusteeships, and they are not even protected from of the employees of that factory could come under the Fed­
claims in case of bankruptcy. In one instance in which I eral plan. It naturally follows, owing to the fact that it
Was the attorney I attempted to protect such fund as a pre- would be to the advantage of employers, that the older em­
ferred fund. The court held there was nothing in the con- ployees would have to come under the Federal plan and
tractUal relation that made it a preferred fund, and held that to younger employees would choose the private annuity plan.
It was commingled with the general assets of the bankrupt That would result in the younger employees not contributing
concern, and was therefore liable to the debts of the bankrupt to the governmental fund, and over a period of years one
concern and that this was not a preferred claim, of two things would happen-either that fund would be
It has been mentioned here that many of these firms will depleted or the premiums to be paid would become pro­
take up insurance. Of course they will. They will take up hibitive.
insurance for those over 40 and have a private system for We have a number of examples.
those under 40, because there Is nothing in the Clark amend- I am a member of the railroad brotherhood. I was ana
ment that provides they cannot set up two systems in one officer prior to my election to Congress. We organized an
plant. They will take the insurance where it does not cost annuity plan that was voluntary. The result was that the
them as much, because all the overhead of the expense of only men who chose to come under the plan were the old
insurance rates will come out of the fund and not out of the employees.
employer. Naturally, he is going to take advantage of this The plan had not been working very long before we found
fact. that it was a mistake. The result was that the brotherhood
I now want to point out one more thing which appeals to lost a number of million dollars, and I sincerely hope that
me as being very serious, and this is the powerful weapon this body will profit by the sad mistakes that we made
in the hands of the employer over the employee. He can during those years
coerce and take away from him all the benefits of the In cases where railroads now- have company pension plans
Wagner Labor Disputes Act. The emancipation of the to which both employer and employee contribute, it has
laborer, his deliverance from coercion, his right to act as a been our experience that the managements have found rea­
free agent, as set forth in this Magna Carta of labor-all its son to lay off employees on one pretext or another, prior
benefits would be seriously endangered if we adopt the Clark to the time they reached a pensionable age. This Is not a,
amendment. matter of theory or conjecture. I can cite numerous
[Here the gavel fell.] examples.
Mr. SAMUEL B. HILL. Mr. Speaker, in connection with Mr. HOUSTON. Will the gentleman yield?
my request to extend my remarks I should like to supplement Mr. WITHROW. I yield.
the request by asking that I be permitted to include memo- Mr. HOUSTON. What effect would this have on the rall­
randa analyzing the Clark amendment and illustrating how road pension plan?
it would work and also a one-page letter from J. B. Glenn, Mr. WITHROW. It would have no effect at all-none
Fellow of the Actuarial Society of America, on the same whatever.
subject. Mr. HOUSTON. I understand that, but In the event that
The SPEAFMR pro tempore (Mr. BoLAND). Is there ob- we defeat the Clark amendment, as I hope we will, what
jection to the request of the gentleman from Washington? effect will it have on the present retirement pension plan?
There was no objection. Mr. WITHROW. None at all. Under the Clark amend­
ment it would be to the advantage of the employer to have
hired only men in the younger age groups. The cost of an
annuity of $1 per annum, beginning at the age of 65, pur­
chased at insurance company rates, is approximately $1.86
at age of 22; $2.18 at age of 27; $4.27 at age of 47; $8.47 at
age of 57.
With such greater costs for older age groups Is very
evident that an employer can provide benefits as hoeral as
those of the Federal plan at a much lower cost if he pursues
the policy of hiring only men in the lower age groups. Em­
ployers do not have to discharge employees when they grow
old to get this advantage. All that they have to do is to
establish a low hiring age limit. Many employers now have
such low hiring age limits. The Clark amendment would
very materially increase the tendency toward the adoption
of such hiring age limits and preclude older men from
securing employment.
I cannot go further with this subject in the limited time
allotted to me. However, it is certain that in order for the
Government plan to be successful it must include all age
groups, and especially the younger age groups, in order to
maintain adequate reserves without resorting to prohibitive
contributions by employees or huge subsidies from the
Government.
TRE SECURITY BILL. The Clark amendment is unsound In every respect.
Mr. DoUGHTON. Mr. Speaker, I yield 5 mInutes to the I urge that It be defeated. [Applause.]
gentleman from Wisconsin [Mr. WrrHnoWl. The SPEAEXR. The time of the gentleman from Wiscon­
Mr. WITHROW. Mr. Speaker and Members of the House, sin has expired.
Ir am opposed to the Clark amendment for two reasons. Mr. DOUGHTON. Mr. Speaker, I trust the House wil
First, because I am of the opinion that it is actuarially un- Insist on disagreeing to and vote down what is known as
sound, and second, because I am convinced that it will the " Clark amendment" I do not pretend to pass on the
LXXX-71
11342 CONGRESSIONAL RECORD-HOUSE JULY 17?
motives of those who favor this amendment. For aught I [Roll No. 1321
know they are sincere, but I am sure that the effect of the YA-7
Clark amendment will be to cripple or destroy this legisla- Allen Dalr~w Holmes R~andey
tion so that its purposes and its objectives will not be accom- Anfdrveen Dtrkeen Hope Reed, flL
teeAndrew.
plished. This debate has demonstrated clearly thatthr Arendls Mass. Ditter
Dondero
Jenkins, Ohio
Kahn
Reed, N. T.
Rich
are many who give but lukewarm or half-hearted support Bacharach Dluffy. N. Y. Rinser Rogers, maws
to this legislation, who at heart are opposed to it and would "eli Eaton Knutson Ryan
Blackney Ekwaul Lehlbach Short
be delighted, in fact, overjoyed, if it could be weakened by Boeline Engel Lord Senel
the adoption of some amendment whereby it would not Brewster Fish McLean Taber
accomplish the purpose and objectives for which it is de- Buckbee Focht Marshall Taylor.5. 0.
Carlson Gifford Martin. Mass. Thurston
signed. If the ~Clark amendment should be adopted, that cavicchija Goodwin Merritt. Conn. nikhiam
means it would throw the burden on the weak, or almost Christianfson Guyer MIchener Treadway
etrlupnteGvrmnadtaofislimyChurch Gwynne Ballard Wadsworth
enirl uo teGoenmn,
ndtato islf n yClaiborne Halleck Mott Wigglesworth
judgment, would tend to so weaken the whole plan that it Cole. Md. Hancock, N. Y. Peterson, Ga, Wilson Pa.
will be of little or no benefit. Under the Clark amendment Cole. N. Y. Hancock. N. C. Pettengal Wolfendien
Costello Hess Pittenger Woodruff
the employer with a private plan is exempt only when he Crowther Hoeppel Plumley
is administering his plan properly. Otherwise he is not CUlkin Hoffman Powers
exempt. If the Clark amendment should be adopted, then NAYS-268
you will by necessity have to set up a bureaucracy with a Atdair Dumnn Pa. Lambertson Robertson
large number of employees because the employee under the AmIlle Eagle Laznbeth Roblnsn,n Ky.
Utah
her-Arnold Eckert LabmRobelon.
Clark plan who is not satisfied with the treatment he~ Ayers Edmiston Larrabee Rogers, N. EL
ceives will be coming post haste to Washington to have an Barden Ellenbogen Lee. Okla. Rogers, Okla.
investigation of the employer as to whether or not, he is Beiter Evans Lemnke Romiue
Blermann Falddls Lesinski Rudd
carrying out the purposes and requirements of the act. Ini Binderup Farley Lewis. Colo. Russell
that way it will require a large number of Governmnent emn- Bland Ferguson Lewis, Md. Sanders, IL.
ployees adiwi
adIwilbiduabuaurc In asngoBlanton Flesinger Luckey Sanders, TeM
biduabueurcinWsigoBloom Flannagan Ludilow Sandlin
the number of whose employees it is not possible at this Boileau Pletcher Lundeen Sauthoff
time to forecast. Moreover, if this law is to succeed, it Boland Ford. Calif. McAndrews Schaefer
Boylan Ford, Miss. McClellan Secrest
must have two purposes. It -must accomplish the purpose Brennan Fe McCormack Seger
for which it is designed, and it must also stand the test of Brooks Fuller McFarlane Slhanley
Brown. Ga. Fulmer Mc~eough Sirovich
the courts, and everyone who is familiar with this bill, who Brui~~; Gambrill McLaughlin Sisson
is qualified to pass a legal opinion, is convinced that if the Buchanan Gasque McMiilan Smith, Conn.
Clark amendment Is adopted, it seriously endangers the Buck Gasaaway McReynolds Smith, Wash.
Va.
Buckler, Mlnn. Gearhart Mahon Smith,
constitutionality of the bill. Burdick Gehrmann Mansfield Smith. W. Vs.
They say, on the other hand, and my good friend from Caldiweli Gilchrlst Mapes Snyder
Cannon. Mo. Gingery Marcantonlo South
Massachusetts (Mr. TRE&DwAY] contended, that in case the Cannon. WI& (Goldsborough Martin, Colo. Spence
bill should be declared null and void, then the private plan Carmichael Grantleld Mason stack
would be destroyed and there would be no protection what- Carpenter Gray, Ind. Massingale Steagan
Cartwright Gray, Pa. maverick Stefan
ever; but I call his attention to the fact that it is not until Castellow Green may Stubbs
1937 that title VIII is effective, and there will be ample time Caller Greenway mead Sumners, TeL.
to have the validity of this act tested in the courts, and if It Chandler Chapma.
Greenwood
Greever
Meeks
Merritt, N. Y.
Tarver
Taylor. 0010.
should fall, then the private plans would still be in existence. citron Gregory Miller Taylor, Tens
So there is no force or potency to that argument. Clark, N. 0. Griswold Mitchell, Ill. Terry
Coffee Hanmlln Mitchell, Tenn. Thom
Mr. DOCKWEILER. As I understand It. under the Clark Oolden Harlan Monaghan Thomason
amendment there is no-provision whereby a corporation which Colmer Hart Montague Thompson
haeIspiaepninpa a ~Connery Harter Moran Tonry
wants to avItprvtpesoplnmyprotect ise-Cooley Healey Moritz Truax
Ployees against its own bankruptcy and the fund being dis- Cooper. Tean. Higgins, Mass. Murdock Turner
sipated, so that the employees would not get anythuing. Cox
Craven, Hildebrandt Nelson Turpin
Hill', Ala. Nichois Umatead
Mr. DOUGHTON. In many cases that is true. Under the Crawford Hill, Knute Norton Utterback
Clark amendment it would not be profitable for older em- Crosby HUIl. Samuel B. O'Connor Vinson, Ga.
ploYees to come under private plans. They get favored treat- Cross, Crowe
Tex. Hobbs
Hook
OmDay
O'Leary
Vinson, Ky.
Walugren
ment under the Government plan, and so they would want to Cullen Houston O'Malley Welter
stay under the Gavernmnent plan. h nypol h
.TeolpepewowudDalyol Cununin Huddleston
nuln O'Neal
Pamlisano Warren
Wearin
be covered by private plans would be the younger workers. Dear Irnboff Parks weaver
"-hus the Govenetplnwudbelfait wul la e ef wt all h
veruen he Deen
dDelaney Jacobsen mnd. Parsons Welch
Jenckes. Patman Werner
risks ", while all the strong contributors would be exempt. Dempsey Johnson. Okla. Patterson West
Very soon the Government fund would be insolvent, and the DeRouen Johnson, W. Va. Patton Wheichel
Dlcksteln Jones Pearson White
entire Insurance principle would be destroyed. Dies Kee Peterson, Fla. Whittington
Theref ore, Wr. Speaker, I am confident the membership of Dietrich Keller Pfeifer Wilcox
the House will vote down the motion to concur, and further Dingenl Kennedy,
Disney Kennedy, Md.N. Y.
Pierce
Polk
Williams
Wilson, La.
insist on disagreeing to the Clark amendment. [Applause.] Dobbinis Kenney Eabaut Withrow
The SPEAKER. The time of the gentleman from North Dockweller Kerr Ramsey Wolcott
Crlnhaexie.Dorsey
Coinhaexie.All time has expired. Kloeb Ramospeck Wolverton
DougJhtont Knimn Randolph Wood
Mr. DOUGHTON. Mr. Speaker. I move the previous ques- Doxey Koclalkowski Raybura Woodrum
to.Drew"y Kopplemann Reece Young
til.Driver Krramer Reilly Zimmerman
The previous question was ordered. Duncan Kvzle Richardson Eioncheck
The SPEAKER. The question now Is on the motion of the NOT VOTING--e
gentleman from Massachusetts to recede and concur In the Anrews. N.YT. Burnham Doutrich Gimettel
Senate amendment, Ashbrook Carter Driscoll Hain"s
Th qesio
akn-Bacon
ws Cary Duff ey. Ohio Hartley
Teqetowata e-Bantenad Casey D~unn, Miss. Hennina
Mr. DOUGHTON. Mr. Speaker, I demand the yeas and Beam Clark,Idaho Richer Higgins. Cons,
32mBerlin Cochran Englebright Hollister
Tahe yesadny e ree.Bolton Collins Fenerty Johnson. Tea.
Teyaannaswroree.Brown, Mich. Cooper, Ohio Fernandes Kelly
The question Was taken; and there weeya 7g, Days Buckley. N. Y. Corning Fitzpatrick Kimben
2688. not voting 83. as follow: BuwniBurch rse,
arden Ohio Gavagan
Gldes, Moeberg
Iamnine
 1935 CONGRESSIONAL RECORD-HOUSE 11343
Lea. Calif. Montet Sabath Starnes Jones Marcantonlo Rayburn Taylor, Tenn.
Lloyd O'Brien Sadowski Stewart Kee Martin. Colo. Reece Terry
LcsO'Connell Schneider Sullivan Keller Mason Reilly Thomn
McGehee Oliver Schuetz Sutphin Kennedy. Md. Massingale Richardson Thomason
McGrath Owen Schulte Sweeney Kennedy. N. Y. Maverick Robertson Thompson
McGroarty Per~kis Scott Thomas Kenney May Robinson. Utah Tonry
McLeod Peyser Scrugham Tobey Kerr Mead Robsion. Ky. Truax
McSwain Quinn Scars Tolan Kloeb Meeks Rogers, N. E. Turner
Maas Rankin Shannon Underwood Kniffn Merritt. N. Y. Rogers.Okia. Turpin
Maloney Richards Somers. N. Y. Knutson Miller Romius Umstead
Koclalkowski Mitchell. M. Russell Utterback
So the motion to recede and concur was rejected. Kopplemann Mitchell. Tenn. Sabath Vinson. Ga.
The Clerk announced the following pairs: Kramer Monaghan Sadowski Vinson. My.
Ontisvt:Kvale Montague Sanders. la. Wallgren
Mr. Corning (for) with Mr. Johnson of Texas (against). Lainbeth Moritz Sandiin Warren
Mr. Bolton (for) with Mr. Sullivan (against). LanhIam Murdock Sauthoff Wearin
Mr. McLeod (for) with Mr. Lucas (against). Larrabee Nelson Schaefer Weaver
Mr. Cooper of Ohio (for) with Mr. Starnes (against). Lea. Calif. Norton Secrest Welch
Mr. Stewart (for) with Mr. Fitzpatrick (against) Lee. Okla. O'Connr Seger Werner
Mr. Hartley (for) with Mr. Somers of New York (against). Lem~ke O'Day Shanley West
Mr. Perkins (for) with Mr. Gavagan (against). Lesinski O'Leary Strovich Whelchel
Mr. Penerty (for) with Mr. Buckley of New York (K8,inst). Lewis. Colo. O'Malley Sisson White
Mr Tomsr fr)wih
Shnidr(aaist.Lewis. Md. O'Neal Smith. Conn. Whittington
Mr. Thomasi (for) with Mr. Suchnie (against). Luckey Owen Smith. Va. Wilcox
Mr. Daoutnc (for) with Mr.Burchn (against). Ludlow Palmisano Smith. Wash. Williams
Mr. Andrews of New York (for) with Mr. Sabath (against). Lundeen Parks Smith. W. Va. Wilson. La.
McAndrews Parsons Snyder Withrow
General pairs: McClellan Patman South Wolcott
McCormack Patterson Spence Wolverton
Mr. Rankin with Mr. Kimball. McFarlane Patton Stack Wood
Mr. Cochran with Mr. Carter. McKeough Peterson. PI&. Steagall Woodruim
Mr. Scrugham with Mr. Burnhamn. McLaughlin Pierce Stef an Young
Mr. Sears with Mr. Maas. McMillan Polk Stubbs Zinnermas
Mr. Sutphin with Mr. Hliggins of Connecticut. McReynolds Rabaut Sumners, Tex. Zlonchack
Mr. Oliver with Mr. Collins. Mahon Ramsay Tarver
Mr. McSwain with Mr. Englebright. Mansfield Ramspeck Taylor. Colo.
Mr. Crosser of Ohio with Mr. Tobey. Mapes Randolph Taylor. S. 0.
Mr. Montet with Mr. Quinn.NYSO
Mr. Sweeney with Mr. Eicher. NY-6
Mr. Schuetz with Mr. Tolan. Allen Dirksen Jenkins. Ohio Reed. 33L
Mr. Raines with Mr. Kelly. Andresen Ditter Ka~hn Reed. N. T.
Mr. Buiwinkle with Mr. Lloyd.. Andrew. Mass. Dondero Kinzar Rich
Mr. Bankhead with Mr. Casey. Arends Ekwall Lehlbach Rogers. Mass.
Mr. McGehee with Mr. Driscoll. Bacharach Engel Lord Ryan
Mr. Clark of Idaho with Mr. O'Brien. Bell Fpsb McLean Snell
Mr. Beam with Mr. Richards. Blackney Focht Marshall Taber
Mr. Fernandez with Mr. Gildea. Brewster Gifford Martin. Mass Thurston
Mr. Kleberg with Mr. Underwood. Carlson Goodwin Merritt. Conn. Tinkhazn
Mr. Gillette with Mr. Hennlngs. Cavicchia Guyer Michener Treadway
Mr. Schulte with Mr. Scott. Christianson Owynne Millard Wadsworth
Mr. Duffey of Ohio with Mr. Owen. Church Halleck Mott Wigglesworth
Mr. Sadowski with Mr. Dunn of Mississippi. Claiborne Hancock. N.YT. Peterson. Ga. Wolfenden
Mr. Darden with Mr. O'Connell. Cole. N. Y. Hess Pettengill Woodruff
Mr. Maloney with Mr. Carey. Costello Hoffman Pittenger
Mr. Lamneck with Mr. McGroarty. Crowther Holmes Powers
Mr. Brown of Michigan with Mr. Lea, of California. Darrow Hope Ransley
Mr. Lea of California with Mr. Ashbrook. NO OJX~
The result of the vote was announced as above recorded. Andrews, N. T. Corning Johnson. Tel. Quinn
The SPEAKER. The question now recurs on the motion Ashbrook Darden Kelly Rankin
oftegentleman from North Carolina [Mr DOUGHTONI Bacon Dear Kimball Richards
ofteBankhead Dobbins Kleberg Rudd.
that the House insist upon its disagreement to the Senate Beam Doutrich Lamneck Schneider
amendments. Berlin
Bloom
Driscoll
Duffy. N. Y.
Lloyd
Lucas
Schuets
Schulte
Mr. DOUGHTON. Mr. Speaker, I ask for the yeas and Bolton Eaton McGehee Scott
nays. Brooks Eicher McGrath Scrugham,
Mr NL.M.Sekr s o h esadny.Brown. Wech. Englebright McGroarty Seaskt
Mr
r.SpakrIas
SEL, fr heyes ndna.Buckley. N. Y. Fenerty McLeod Shannon
The yeas and nays were ordered. Bulwinkie Fernandez McSwain short
The question was taken; and there were-yeas 269. nays Burnham
Burch Fitzpatrick
Gassaway Mas
Maloney Somers.
Starnes N. Y.
65. not voting 95. as followv. Carmichael Gavagan Montet Stewart
[Roll NO. 133j Carter Gilden Nichols Sullivan
Cartwright Gillette O'Brien Sutphin
YEAS-269 Cary Halnes O'Connell Sweeney
Adar
lak.N.C. Douhtn olabrogh Casey THamlin Oliver Thomas
Adi
lr.N . Duho odbruh Citron Hartley Pearson Tobey
Amlie Coffee Doxey Granfleld Clark. Idaho Hennings Perkins Tolan
Arnold Colden Drewry Gray. Ind. Coch~ran Higgins. Conn. Peyser Underwood.
Ayers Cole. Md. Driver Gray. Pa. Collins Holllster Pfeifer Wilson. Pla.
Barden Colmer Duffey, Ohio GreenCoprOho Jns. k.Plme
Better Connery Duncan GreenwayCop.Oho ohsnOka Plme
Blermnann Cooley Dunn. Miss. Greenwood So the motion was agreed to.
Binderup Cooper. Tenn. Dunn. Pa. Greever
Bland Coz Eagle Gregory The Clerk announced the following additional pairs:
Blanton Cravens Eckert Griswold On this vote:
Boehne Crawford Edmiston Hancock. N. 0. M.Jhsno ea fr ihM.Crig(gis)
Bolleau Crosby Ellenbogen HrArlan Mr. SulivnsnoTea (for) withBorninn
Mr. (agains)
Boland Cross. Tex. EasLr Bolto r ulvn(o)wt r (against).
Boylan Crosser. Ohio Faddie Harte Mr. Lucas (for) with Mr. McLeod (g. s)
Brennan Crowe Parley Healey Mr. Starnes (for) with Mr. Cooper of Ohio (against).
Brown. Ga. Culkin Ferguson Higgins. Mass. Mr. Fitzpatrick (for) with Mr. Stewart (against).
Brunner Cullen Fiesinger Hlldebrandt Mr. Somers of New York (for) with Mr. Hartley (against).
Buchanan CuMmingS Flannagan KMl, Ala.. Mr. Gavagan (for) with Mr. Perkins (against).
Buck Daly Fletcher Hili. Knute Mr. Buckley (for) with Mr. Fenerty (against).
Buckbee Deen Ford. Calif. Hill. Samuel B. Mr. Schneider (for) with Mr. Thomas (against).
Buckler. Minn. Delaney Ford. Miss Hobbs Mr. Burch (for) with Mr. Doutrich (against).
Burdick Dempsey preyHope Mr. Berlin (for) with Mr. Bacon (against).
Caidwell DeRouen Fuller Hook Mr. Bloom (for) with Mr. Holliater (against).
Cannon. Mo. Dickstein Fulmer Houston Mr. Pfeifer (for) with Mr. Short (against).
Cannon. Wisn Dies Gambrill Huddleston Mr. Brooks (for) with Mr. Baton (against).
carpenter Dietrich Gasque Rull Mr. Rudd (for) with Mr. Wilson of Pennsyivani (against).
CastellOw Dingeli Gearhart Imboff Gnrlpis
Celler Disney Gehrmann Jacobsen GnrlPis
Chandler Dockweiler Gilchriat Jenckes. Ind. Mr. Rankin with Mr. Kimball.
Chapmnan Dorsey Gingery Johnson. W. Va. Mr. Cochran With Mr. Corter.
11344 CONGRESSIONAL RECORD-HOUSE JULY 17
Mr. Scruigham with Mr. Bur~nham.
Mr, Sears with Mr.Mss
Mr, Sutphin With Mr. Higgins of Oonnecticxv.
Mr, Johnson of Oklahoma with Mr. plumley.
Mr. Cartwright with Mr. Tobey.
Mr. Carmichael with Mr. Andrews of New York.
Mr. Oliver with Mr. Vollins.
Mr, McSwaln with Mr. Englebright.
Mr. Montet with Mr. Quinn.
Mr. Sweeney with Mr. Richer.
Mr. Schuetz with Mr. Tolan.
Mr. HaInes with Mr. Kelly.
Mr. BuwInkle with Mr. Lloyd.
Mr. Bankhead with Mr. Casey.
Mr. Mc~ehee with Mr. Driacoll.
Mr. Clark of Idaho with Mr. O~BrIen
Mr. Beam with Mr. Richards.
Mr. Fernandez with Mr. Gildea.
Mr. Kleberg with Mr. Underwood.
Mr. Gillette With Mr. Henninip.
Mr. Schulte with Mr. Scott.
Mr. Dardlen with Mr. QO'onnelL.
Mr. Maloney with Wr. Carey.
Mr. Lamneck with Mr. Mc~roaxty.
Mr. Brown of Michigan with Mr. McGrath.
Mr. GassaWay with Mr. Ashbr o.
Mr. Pearson with Mr. Duffy of New York.
Mr. Nichols with Mr. Hamlin.
Mr. Dea With Mr. Dobbins.
The result of the vote was announced as above recorded.
A motion to reconsider the vote by which the motion was
agreed to was laid on the table.
1935 CONGRESSIONAL RECORD-HOUSE 11345

EXPLANATION OF VOTS
Mr. BOIANqD. Mr. Speaker, I wish to announce that my
colleagues, Mr. Bzu~nr and Mr. HEnDs, are unavoidably
absent. Were they present, they would have voted "1no*
on the Treadway motion and would have voted Iaye" onL
the Doughton motion.
 July 17, 1935
11300 CONGRESSIONAL RECORD-SENATE JULY 17

MESSAGE FROM THM HOUSE

Amessage from the House of Representatives, by Mr.
Chaffee, one of its reading clerks, announced that the House
had agreed to the report of the committee of conference
on the disagreeing votes of the two Houses on the amend­
ments of the Senate to the bill (H. R. 7260) to provide for
the general welfare by establishing a system of Federal old-
age benefits, and by enabling the several States to make
more adequate provision for aged persons, dependent and
crippled children, maternal and child welfare, public health,
and the administration of their unemployment compensa­
tion laws; to establish a Social Security Board; to raise
revenue; and for other purposes, and that the House insisted
upon Its disagreement to the amendments of the Senate
numbered 17, 67, 68, 83, and 84 to the bill.
1935 CONGRESSIONAL RECORD-SENATE Jl 7 1935 11307

SOCMA SECURrTY--CONFERENCE REPORT

Mr. HARRISON submitted the following report:
The committee of conference on the disagreeing votes of the
two Houses on the amendments of the Senate to the bill (H. B.
7260) to provide for the general welfare by establishing a system
of Federal old-age benefits, and by enabling the several States to
make more adequate provision for aged persons. dependent and
crippled children, maternal and child welfare, public health, and
the administration of their unemployment-compensation laws; to
establish a Social Security Board; to raise revenue; and for other
purposes, having met, after fuUl and free conference, have agreed
to recommend and do recommend to their respective Houses as
follows:
That the Senate recede from Its amendments numbered 2, 3,
6. 7, 8. 10. 11. 12, 13. 14. 15. 18. 22. 23, 24, 25. 26. 27, 29. 30. 31.
32, 33, 34. 35, 36. 37, 38. 40, 41, 42, 43, 44, 61, 85, 70, 75. 76, 77,
78, 79. 80. 81. 86. 90, 92, 105. and 108.
That the House recede from its disagreement to the amend­
ments of the Senate numbered 1. 5, 9, 16. 20. 21. 28. 39. 45, 46,
47, 48. 49. 50, 51. 52, 53. 54. 55, 56. 57. 58. 60. 62. 63. 64. 66. 69,
71, 72. 82. 88. 89, 93. 94. 95, 96, 97. 98, 102, 103. and 109, and
agree to the same.
Amendment numbered 4: That the House recede from Its dis­
agreement to the amendment of the Senate numbered 4. and
agree to the same with an amendment, as follows: In Uieu of the
matter proposed to be inserted by the Senate amendment rinset
the following: *': Provided. That the State plan. In order to be
approved by the Board, need not provide for finalncial participa­
tion before July 1, 1937 by the State, In the case of any State
which the Board, upon application by the State and after reason­
able notice and opportunity for hearing to the state, finds Is
 11308 CONGRESSIONAL RECORD-SENATE JULY 17
prevented by Its Constitution from providing such financial par- the plan with respect to any, period with respect to which he is
ticipation "; and the Senate agree to the same. receiving old-age assistance under the State plan approved under
Amendment numbered 19: That the House recede from Its dis- section 2 of this Act.
agreement to the amendment of the Senate numbered 19. and `(b) The Board shall approve any plan which fulfills the condi­
~agree to the same with an amendment as follows: In lieu of the tionsa spedified in subsection (a). except that it shall not approve
matter proposed to be Inserted by the Senate amendment insert any plan which imposes, as a condition of eligibility for aid to the
the following: *' or such other agencies as the Board may ap- blind under the plan­
prove "; and the Senate agree to the same. "(1) Any residence requirement which excludes any resident of
Amendment numbered 59: That the House recede from Its dis. the State who has resided therein five years during the nine years
agreement to the amendment of the Senate numbered 59. and immediately preceding the application for aid and has resided
agree to the same with an amendment as follows: On page 8 of therein continuously for one year Immediately preceding the appli­
the Senate engrossed amendments strike out line 12 and insert. in cation; or
lieu thereof the following: " welfare services (hereinafter In this "(2) Any citizenship requirement which excludes any citizen of
section referred to as * child-welfare services ') for the protection the United States.`
and care of homeless, dependent, and neglected children, and And the Senate agree to the same.
children In danger of becoming delinquent " and a comma; and Amendment numbered 101: That the House recede from Its dis­
the Senate agree to the same. agreement to the amendment of the Senate numbered 101, and
Amendment numbered 73: That the House recede from Its dis- agree to the same with the following amendments: On page 24 of
agreement to the amendment of the Senate numbered 73. and the Senate engrossed amendments, line 19, strike out " Permna­
agree to the same with an amendment as follows: In lieu of the nently '. and on page 25 of the Senate engrossed amendments.
matter proposed to be Inserted by the Senate amendment Insert line 18. strike out "permanently "; and the Senate agree to the
the following: " If the tax Is not paid when due, there shall be same.
added as part of the tax Interest (except in the case of adjust- Amendment numbered 104: That the House recede from Its dis­
ments made In accordance with the provisions of sections 802 (b) agreement to the amendment of the Senate numbered 104, and
and 805) at the rate of one-half of 1 per centumn per month from agree to the same with an amendment as follows: In lieu of the
the date the tax became due until paid "; and the Senate agree to matter proposed to be Inserted by the Senate amendment insert
the same, the following:
Amendment numbered 74: That the House recede from Its dis- - DErINfITION
agreement to the amendment of the Senate numbered 74, and "Sac. 1008. When used In this title the term I aid to the blind
agree to the same with an amendment as follows: Iii lieu of the means money payments to blind individuals."
matter proposed to be Inserted by the Senate amendment insert And the Senate agree to the same.
the following: " together with a statement of the additional ex- Amendment numbered 108: That the House recede from Its dis­
penditures In the District of Columbia and elsewhere incurred by agreement to the amendment of the Senate numbered 106. and
the Post Office Department In performing the duties Imposed upon agree to the same with an amendment as follows: In lieu of the
said Department by this act, and the Secretary of the Treasury matter proposed to be Inserted by the Senate amendment Insert
is hereby authorized and directed to advance from time to time the following: "XI": and the Senate agree to the same.
to the credit of the Post Office Department from appropriations Amendment numbered 107: That the House recede from Its dis­
made for the collection of the taxes imposed by this title, such agreement to the amendment of the Senate numbered 107. and
sums as may be required for such additional expenditures Incurred agree to the same with an amendment as follows: In lieu of the
by the Post Office Department "; and the Senate agree to the same, matter proposed to be Inserted by the Senate amendment Insert
Amendment numbered 85: That the House recede from its dis- the following: "11101 "; and the Senate agree to the same.
agreement to the amendment of the Senate numbered 85. and Amendment numbered 110: That the House recede from Its dis­
agree to the same with an amendment as follows: In lieu of the agreement to the amendment of the Senate numbered 110, and
matter proposed to be Inserted by the Senate amendment Insert agree to the same with an amendment as follows: In lieu of the
the following ' EIGHT "; and the Senate agree to the same, matter proposed to be Inserted by the Senate amendment Insert
Amendment numbered 87: That the House recede from Its dis- the following: " 1102"1; and the Senate agree to the same.
agreement to the amendment of the Senate numbered 87. and Amendment numbered Ill: That the House recede from Its dis­
agree to the same with an amendment as follows: In lieu of the agreement to the amendment of the Senate numbered 111, and
matter proposed to be inserted by the Senate amendment Insert agree to the same with an amendment as follows: In lieu of the
the following: " or such other agencies as the Board may approve "; matter proposed to be Inserted by the Senate amendment Insert
and the Senate agree to the same, the following " 1103 'I; and the Senate agree to the same.
Amendment numbered 91: That the House recede from Its dis- Amendment numbered 112: That the House recede from Its dis­
agreement to the amendment of the Senate numbered 91. and agree agreement to the amendment of the Senate numbered 112, and
to the same with an amendment as follows: In lieu of the matter agree to the same with an amendment as follows: In lieu of the
proposed to be Inserted by the Senate amendment Insert the follow- matter proposed to be inserted by the Senate amendment insert
Ing: "eight"1; and the Senate agree to the same, the following " 1104 "; and the Senate agree to the same. ­
Amendment numbered 99: That the House recede from Its dis- Amendment numbered 113: That the House recede from Its dis­
agreement to the amendment of the Senate numbered 99. and agree agreement to the amendment of the Senate numbered 113. and
to the same with an amendment as follows: In lieu of the matter agree to the same with an amendment as follows: In lieu of the
proposed to be Inserted by the Senate amendment Insert the matter proposed to he inserted by the Senate amendment Insert
following: the following " 1105 "1; and the Senate agree to the same.
"APPRlOPRIATION That the House recede from Its disagreement to the amendment
"SEcTroN 1001. For the purpose of enabling each State to furnish of the Senate to the title of the bill and agree to the same.
financial assistance, as far as practicable under the condition In The committee of conference have not agreed on the
such State, to needy individuals who are blind, there is hereby amendments: Amendments numbered 17, 67. 68, 83. and following 84.
authorized to be appropriated for the fiscal year ending June 30, PAT HARRISON.
1936, the sum of $3,000,000. and there is hereby, authorized to be WrLLIAm H. KiNa,
appropriated for each fiscal year thereafter a sum sufficient to Carry WALTZR P. EORoso,
out the purposes of this title. The sums made available under this HRsNsT W. XZYFE.
section shall be used for making payments to States which have RanogrRn tLe prtof the, SJrt.
submitted, and had approved by the Social Security Board, StateMagesothprtfteSnt.
plans for aid to the blind." R.I.L. DotXOHTON.
And the Senate agree to the same. SAm B. HILL,
Amendment numbered 100: That the House recede from its dis- THo~s. H. Cuiz.LES
agreement to the amendment of the Senate numbered 100. and agree ALLEI( T. TszADwAT,
to the same with an amendment as follows: In lieu of the matter IsAAc BACHASACIL
proposed to be Inserted by the Senate amendment insert the Managers on the part of the House,
following:
"STATE PLANS FOR AID TO THE BLIND Mr. McNARY. Mr. President, I think it would
"Sac. 1002. (a) A State plan for aid to the blind must (1) pro- worth while and informative if the Senator would discuss
bequite
vide that It shall be In effect In all political subdivisions of the thecnrnerpot
State, and, if administered by them. be mandatory upon them; (2) ecneec eot
provide for financial Participation by the State; (3) either provide Mr. HARRISON. Mr. President, I was about to make a
for the establiahsnent or designation of a single State agency to statement with reference to it. The conferees on the social-
administer the plan, or provide for the establishment or designs- security bill have reached an agreement on all differences
tion of a single State agency to supervise the administration of
the plan; (4) provide for granting to any Individual, whose claim except the so-called " Clark and Black amendments." The
for aid is denied, an opportunity for a fair hearing before such Black amendment went with the Clark amendment--pro­
State agency; (5) provide such methods of administration (other viding for continuation of private pension plans. The con­
than those relating to selection, tenture of office, and compensation
of personnel) as are found by the Board to be necessary for the ferees were unable to- agree on that matter.
efficient operation of the plan; (6) provide that the State agency The conferees met many times, I think having more than
Will make such reports, In such form and containing such informa- a dozen meetings. Throughout the Senate conferees tried to
tion, as the Board may from time to time require, and comply with carry out the wishes of the Senate as required by the record
such provisions as the Board may from time to time find neces­
sary to assure the correctness and verification of such reports; and vote on the so-called " Clark amendment." The House con­
(7) Provide that no aid Will be furnished any individual under ferees were adamant as to the Clark amendment, though
1935 CONGRESSIONAL RECORD--SENATE 11309
they were able to agree on all the other differences between Mr. HARRISON. Yes; I feel sure that there Is no way to
the House and the Senate. As soon as this part of the put the amendment in this bill after what has occurred.
report shall be adopted, as I hope it may be, I expect to ask Mr. NORBECK. I very much regret, indeed, the way we
that the Senate further insist upon the so-called " Clark treat the Indians, because they are so helpless. Whole famni­
and Black amendments " and that a further conference be lies of them have been living on a dollar a week. We have
had with the House on those matters. now begun to recognize that we took away their lands from
I may say in that connection, however, that when the them without Just compensation and have passed 80 or 90
House conferees reported today the report was overwhelm- statutes providing that they may sue. One statute, affecting
ingly adopted and the House disagreed to the Clark amend- a certain tribe of Indians, was passed during the Wilson ad­
metby a vote of 269 to 77. ministration. The case has not as yet been tried: but the
There were several amendments of some importance on House, In handling an appropriation bill last week, put in a.
which we Were able to agree. The so-called "1Russell amend- proviso that the suits might be started all over again. That
ment ", for instance, which was designed to take care of is, they Provided that different counterclaims might be made.
those States which, because of constitutional inhibitions, but they did not make any distinction between suits which
would be unable to participate in the matter of old-age permitted counterclaims and those which did not. In fact.
assistance, was modified to some extent, but will carry, out the representative of the Department of Justice said there.
the general purposes of the original amendment, in that the were 24 of these cases where the act was broad enough to
States may participate without appropriations of funds by admoit all counterclaims.
the State. The aggregate of amounts the political I am pleased to say that the Senate Appropriations Corn'
subdivisions of each State put up for old-age assistance mittee did not take the view of the House; but we know that
plans will be matched by the Federal Government. just as the House is going to insist on its proviso. The Senate
if the State were financially participating. The objective of committee felt that It was legislation on an appropriation
the Russell amendment was thus achieved in substance, bill, and therefore improper. They felt that It was entirely.
and the House has agreed to it. too broad, too unfair in Its basis, so the proviso was stricken
The House receded on the so-called "1La Follette amend- from the appropriation bill by the Senate committee.
ment '", on which the sentiment of the Senate was prac- Whether or not we are going to yield on that, too, I do not
tlcally unanimous. That was an amendment giving the know; but I hope that even the Indians may be given a little
option to States to adopt various plans with reference to consideration. The older Indians, who have lost their hunt-
unemployment insurance, whether the pool system or the Ing grounds and their opportunity to make a living by agri­
separate reserve system, and permitting additional credit culture, and who are living on reservations that do not
against the Federal tax where State contributions are re- produce, have simply been told to starve; and even now in
duced because of stabilization. The wishes of the Senate this bill they are simply told. " We shall take care of every­
prevailed in that matter. body eise but not of the Indians."
Mr. WALSH. Mr. President- I regret that the Senate had to yield on this amendment,
The VICE PRESIDENT. Does the Senator from Misss Mr. HARRISON. Mr. President, the Senate conferees were
sipp
Snatryild frmte
o Mssahustts insympathy with the views of the Senator from South
Mr. HARRISON. I do. aoa
Mr. WALSH. May I ask the Senator what was done Mr. LA FOLLETT'E. Mr. President, will the Senator from
about the amendment in which I was interested, which was Mississippi yield?
proposed and* adopted when the bill was before the Senate, Mr. HARRISON. I yield.
relating to noninterference by Federal officials with parental Mr. LA FOLLETTE. I should like to say, for the benefit
control of children? of the Senator from South Dakota, that as one of the
Mr. ARRSON.Tha wastakn cae o. Th use Senate conferees I was very much interested in his amend­
MrecdeonHARtIONofTheeatoras tamendmaent andThe Hen ment. My interest was not only because of the fact that the
f te nSnatr'samedmet,
receed prt nd he en-Senator from South Dakota had 'sponsored the amendment.
ate receded on the other part. Of course, the Senator will but because as a member of the Senate Committee on Indian
recall that we invited him before the conference committee Affairs I was somewhat familiar with the problem which
to explain the amendment, and I think the wishes of the the Senator's amendment tried to reach; and I was very
Senate largely prevailed in that matter, much in sympathy with its objective.
The Senator from South Dakota [Mr. NORBEcKcl had an I desire to say, in support of what the chairman of the
amendment with reference to pensions for Indians. I may Senate conferees has had to say, that it Is my, opinion thiat
say that the Senate conferees fought valiantly in behalf of we could not prevall upon the House conferees to accept that
the amendment offered by the Senator from South Dakota, amendment even if we should vote down the conference re­
but our wishes did not prevail, and at the very last moment port and have another conference. The House conferees
the Senate conferees finally yielded on that amendment,. were absolutely adamant upon the subject. I also desire to
Mr. NORBECK. Mr. President, does the Senator feel that assure the Senator from South Dakota that I shall be glad.
if the Senate should take a definite stand for a pension for as one Member of the Senate, to help him in attempting to
Indians the House might go along In regard to it? have this matter taken care of in a separate piece of legis­
Mr. HARRISON. The Senate conferees did take a definite lation.
stand, Mr. NORBECK. I thaink the Senator.
Mr. NORBECK. No; I mean, if the Senate, by vote of the Mr. HARRISON. Mr. President, there are Just two other
Senate, should take such a stand, does the Senator feel that matters I wish to mention which were in difference between
that would have any influence on the situation in the House? the two Houses.
Mr. HARRISON. If we were to take a vote now? One of these was whether the Social Security Board should
Mr. NORBECK. Yes. be an independent agency or under the Department of Labor.
-Mr.HARRISON. Of course, the Senator is fully cognizant It will be recalled that the Senate placed it under the De­
of the rules of the Senate, because he has been here a long partment of Labor. The Senate was forced to yield on that
time, and has handled man bills. In order to do that, we matter.
should have to vote down the entire report: and while I share As to the other matter, the amendment to take care of the
the sympathy which the Senator has for the Indians, I hope blind, the Senate's views on that subject prevailed, with an
we shall not have to go to the extreme measure of voting amendment.
down the entire report in order to secure another vote on I shall be glad to answer any further questions in regard
that one amendment. to the conference report.
Mr. NORBECK. The Senator thinks the Senate amend- The VICE PRESIDENT. The question is on agreeing to
ment would be rejected In the House even if we should do the conference report.
thatThe report was agreed to.
Lxm-Yi3
11310 CONGRESSIONAL RECORD--SENATE JULY 17
The VICE PRESIDENT laid before the Senate the action
of the House of Representatives on certain amendments in
disagreement, which was read. as follows:
IN THE HOUSE or ItzpaEsENTATXv~s. UNITED STATES,
July 17. 1935.
Resolved. That the House insist upon its disagreement to the
amendments of the Senate nos. 1,7, 67. 68, 83. and 84 to the biUl
(H. R. 7260) to provide for the general welfare by establishing a
system of Federal old-age benefits, and by enabling the several
States to make more adequate provision for aged persons, depend­
ent and crippled children, maternal and child welfare, public
health, and the administration of their unemployment compensa-
Uon laws; to establish a Social Security Board; to raise revenue;
and for other purposes.
Mr. HARRISON. Mr. President, on the four -or five
amendments still in disagreement, I move that the Senate
Insist upon its amendments and ask for a further confer­
ence with the House, and that the Chair appoint the con­
ferees on the part of the Senate.
The VICE PRESIDENT. The question Is on the motion
of the Senator from Mississippi.
The motion was agreed to; and the Vice President ap­
pointed Mr. HARRISON, Mr. KINGc Mr. GEORGE. Mr. KEYES.
and Mr. LA FOLLETTE conferees on the part of the Senate at
the further conference with the House of Representatives.
Mr. CONNALLY. Mr. President. is it the purpose of the
conferees to have a vote in the Senate on the Clark amend­
ment?
Mr. HARRISON. That amendment has gone back to
conference.
 July 18,1 1935
11406 CONGRESSIONAL RECORD-HOUSE JULY 18

MEESSAGE FROM THE SENATE

A message from the Senate, by Mr. Horne, its enrolling
clerk, announced that the Senate agrees to the report of the
committee of conference on the disagreeing votes of the two
Houses on the amendments of the Senate to the bill (H. R.
7260) entitled "An act to provide for the general welfare by
establishing a system of Federal old-age benefits, and by
enabling the several States to make more adequate provision
for aged persons, dependent and crippled children, maternal
and child welfare, public health, and the administration of
their unemployment compensation laws; to establish a Social
Security Board: to raise revenue; and for other purposes.'
The message also announced that the Senate further Insists
upon Its amendments numbered 17, 67, 68, 83, and 84 to
the foregoing bill, asks a further conference with the House
on the disagreeing votes of the two Houses thereon, and
appoints Mr. HARRssoN, Mr. KiNGo Mr. GEORGE, MW.KzEEs,
and Mr. LA FOLLETTE to be the conferees on the part of the
Senate.

THE SOCIAL-SECURXTY B111L

Mr. SAMUEL B. HILL. Mr. Speaker, I ask unanimous con­
sent to take from the Speaker's table the bill H. R. 7260, the
social-security bill, further insist on its disagreement to the
amendments of the Senate, and agree to the conference
asked for.
The SPEAKER. The Clerk will report the title.
The Clerk'read the title, as follows:
H. R. 7260
To provide for the general welfare by establishing a system of
'l'ederal old-age benefits, and by enabling the several States to make
more adequate provision for aged persons, dependent and crippled
children, maternal and child welfare, public health, and the admin­
istration of their unemployment compensation laws; to establish a
social Security Board; to raise revenue; and for other purposes.
The SPEAKER. is there objection to the request of the,
gentleman from Washington?
There was no objection.
The Chair appointed as conferees on the part of the House
Wr. DOUGHTON, Mr. SAmuEL B; HILL, Mr. CuLLEN, Mr. TREnD­
wAY, and Mr. BAcHARAcH.
11386 CONGRESSIONAL RECORD-SENATE JULY 18

MESSAGE FROM THE HOUSE

1935 CONGRESSIONAL RECORD-SENATE 11387

The message also announced that the House further In­

sisted Upon its disagreement to the amendments of the Sen­
ate numbered 17, 67, 68, 83. and 84 to the bill (H4. R. 7260)
to provide for the general welfare by establishing a system
of Federal old-age benefits, and by enabling the several
States to make more adequate provision for aged persons,
dependent and crippled children, maternal and child welfare,
public health, and the administration of their unemployment
compensation laws; to establish a Social Security Board; to
raise revenue; and for other purposes; agreed to the further
conference asked by the Senate on the disagreeing votes of
the two Houses thereon, and Mr. DOUGHTON, Mr. SAm B. HILL,
Mr. CULLEN, Mr. TREADWAY, and Mr. BACHARACH were appointed
managers on the part of the House at the further conference.
74TH CONGRESS HOUSE OF REPRESENTATIVES .~REPORT

1st Session No. 1744

SOCIAL SECURITY BILL

AlUGUST 8, 1935.-Ordered to be printed

Mr. DOUGHTON, from the committee of conference, submitted the

following

CONFERENCE REPORT
[To accompany H. R. 7260]

The committee of conference on the disagreeing votep of the two

Houses on the amendments of the Senate nos. 17, 67, 68, 83, and 84
to the bill (H. R. 7260) to provide for the general welfare by estab­
lishing a system of Federal old-age benefits, and by enabling the
several States to make more adequate provision for aged persons,
dependent and crippled children, maternal and child welfare, public
health, aind the administration of their unemployment compensation
laws; to establish a Social Security Board; to raise revenue; and for
other purposes, having met, after full and free conference, have agreed
to recommend and do recommend to their respective Houses a~s
follows:
That the Senate recede from said amendments.
R. L. DOTUGHTON,
SAm. B. HILL,
THOS. H. CULLEN,
ALLEN T. TREADWAY,
ISAAc BACHARACH,
Managerson the part of the House.
PAT HARRISON,
WILLIAM H. KING,
WALTER F. GEORGE,
ROBERT M. LA FOLLETTE, Jr.,
Managers on the part of the Senate.
STATEMENT OF THE MANAGERS ON THE PART OF THE HOUSE
The managers on the part of the House at the conference on the
disagreeing votes of the two Houses on the amendments of the
Senate nos. 17, 67, 68, 83, and 84 of the bill (H. R. 7260) to provide
for the general welfare by establishing a system of Federal old-age
benefits, and by enabling the several States to make more adequate
provision for aged persons, dependent and crippled children, maternal
and child welfare, public health, and the administration of their
unemployment compensation laws; to establish a Social Security
Board; to raise revenue; and for other purposes, submit the following
Writtn statement in explanation of the action agreed upon by the
conferees and recommended in the accompanying conference report:
Senate amendments nos. 17, 67, 68, and 83, in effect exempt from
the old-age pension provisions found in title II employees covered
by private pension plans approved by the Social Security Board; and
from the tax provisions of title VIII employers operating such plans,
with respect to employees who are thus covered. Conditions of the
Board's approval are set forth in some detail, designed to require the
priate plan to afford advantages at least equivalent to those found in
title II. Amendment no. 84 makes it unlawful for any employer
under an approved plan to contract with any insurance company,
annuity organization, or trustee with respect to carrying out a private
pension plan, if any director, officer, employee, or shareholder of the
employer is at the same time a director, officer, employee, or share­
holder of the insurance company, annuity organization, or trustee;
makes unlawful the granting or accepting of rebates against charges
payable under any contract carrying out a private pension plan;
requires an insurance company, annuity organization, or trustee who
makes any contract with an employer for carrying out a private pen­
sion plan to keep and preserve such accounts and records with respect
to the contract and the financial transactions of the company, annuity
organization, or trustee, as the Board deems necessary to insure the
proper carrying out of the contract and to prevent fraud and collu­
sion; and provides a penalty of not more than $10,000 fine or 1 year's
imprisonmnent, or both, for violation of any of these provisions. On
all these amendments the Senate recedes.
R. L.DOUrGHTON,
SAM. B.
HILL,
Tuos. H. CULLEN,
ALLEN T. TREADWAY,
ISAAc BACHARACH,
Manatgers on the part of the House.
2
0
1935 CONGRESSIONAL RECORD-HOUSE August 8., 1935 12759

SOCIAL SECURIT
Mr. DOUGHTON. Mr. Speaker, I submit a conference
report and statement upon the bill (H. R. 7260) to provide
for the general welfare by establishing a system of Federal
old-age benefits, and by enabling the several States to make
more adequate provision for aged persons, dependent and
crippled children, maternal and child welfare, public health,
and the adnlinistration of their unemployment compensation
laws; to establish a Social Security Board; to raise revenue;
and for other purposes, for printing under the rule.
The conference report and statement are as follows:
coNiRzMeCu Rxroav
The committee of conference on the disagreeing Totes of the two
Houses on the amendments of the Senate nlea. 17. 67. 68, 83, and
84 to the bill (H. Rt. 7280) to provide for the general welfare by
establishing a system of Federal old-age benefits, and by enabling
the several States to make more adequate provision for aged per­
sons, dependent and crippled children, maternal and child welfare,
public health, and the administration of their unemployment
compensation laws; to establish a Social Security Board; to raise
revenue; and for other purposes, having met, after full and free
conference, have agreed to recommend and do recommend to their
respective Houses as follows: That the Senate recede from said
amendments.
It. L. Doucwrow,
SAm B. Hans.,
Tnos. H. CULLEN,
ALLEN T. TaIADwAT.
ISAAC BACHARACN.
Managers on the part of the House.
PAT HARaxsoN,
WILLIAX H. KING,
WALTER F. GERoGns
RoBERT M. LA FoLLE~rE Jr,
Managers on the part of the Senate.
STATZhUNr
The managers on the part of the House at the conference on
the disagreeing votes of the two Houses on the amendments of
the Senate nos. 17, 67, 68, 83, and 84 to the bill (H. R. 7260) to
provide for the general welfare by establishing a system of Federal
old-age benefits, and by enabling the several States to make more
adequate provision for aged persons, dependent and crippled chll­
dren, maternal and child welfare, public health, and the adminis­
tration of their unemployment compensation laws; to establish a
Social Security Board; to raise revenue, and for other purposes,
submit the following written statement In explanation of the
action agreed upon by the conferees and recommended In the
accompanying conference report:
Senate amendments nos. 17. 67, 68, and 83. in effect exempt from
the old-age pension provisions found In title U1 employees covered
by private pension plans approved by the Social Security Board;
and from the tax provisions of title VIII employers operating such
plans, with respect to employees who are thus covered. Condi­
tions of the Board's approval are set forth in some detail, designed
to require the private plan to afford advantages at least equivalent
to those found in title II. Amendment no. 84 makes It unlawful
for any employer under an approval plan to contract with any
insurance company, annuity organization, or trustee with respect
to carrying out a private pension plan. If any director, officer, em­
ployee, or shareholder of the employer is at the same time a direc­
tor, officer, employee, or shareholder of the Insurance company.
annuity organization, or trustee; makes unlawful the granting or
accepting of rebates against charges payable under any contract
carrying out a private pension plan; requires an insurance com­
pany. Annuity organization, or trustee who makes any contract
with an employer for carrying out a private pension plan to keep
and preserve such accounts and records with respect to the con­
tract and the financial transactions of the company, annuity or­
ganization, or trustee, as the Board deems necessary to Insure the
proper carrying out of the contract and to prevent fraud and
collusion; and provides a penalty of not more than *10.000 fine or
1 year's Imprisonment, or both, for violation of any of these
provisions. On all these amendments the Senate recedes.
R. L. DouamoN,,
Swm B. HITT,-
Tuos HELCusLL=s,
ALLEN T. TRZwASA,
ISAAC BACxARAac
Managers on the part of the House
Mr. DOUGETON. Mr. Speaker, I ask unanimous consent
for the present consideration of the conference report.
The SPEAKER, rs there objection?
 12760 CONGRESSIONAL RECORD-HOUSE AUGUST 8
Mr. 0'MALLEY. Mr. Spea-ker, I reserve the right to object;
to ask the chairman of the committee what became of the
Clark amendment?
Mr. DOUGHTON. The Senate receded on the Clark
amendment.
The SPEAKER. Is there objection?
There was no objection.
Mr. DOUGHTON. Mr. Speaker, I ask unanimous consent
that the statement may be read in lieu of the report.
The SPEAKER. Is there objection to the request of tho
gentleman from North Carolina?
There was no objection.
The Clerk read the statement.
The SPEAKER. The question is on agreeing to the con­
ference report.
The conference report was agreed to.
A motion to reconsider was laid on the table.
PERMISSION TO ADDRESS THE HOUSE
Mr. TREADWAY. Mr. Speaker. I ask unanimous con­
sent to address the House for 2 minutes.
The SPEAKER. Is there objection?
There was no objection.
Mr. TREADWAY. I understood there was to be an ex­
planation offered by the Chairman of the Committee on
Ways and Means, but as the Speaker declared the conference
reported was adopted, the gentleman from North Carolina
will not have an opportunity to offer an explanation on the
floor.
The SPEAKER. The conference report was adopted. The
Chair did not understand the gentleman desired recognition.
Mr. TREADWAY. I ask unanimous consent to proceed,
Mr. Speaker.
The SPEAKER. The gentleman has been recognized.
Mr. TREADWAY. I do this simply to say that I have
been one of those anxious to see the Clark amendment put
into the bill. It has been voted out by the conference, first
by the House conferees, and that action was approved by a
House vote, and the Senate conferees have receded. The
Clark amendment is therefore out of the bill as adopted in
conference just now.
A study that has been made by experts interested in this
matter leads them to believe that with further study they
will be able to work out some scheme by which the principle
of private insurance-that is, insurance by corporations for
their employees, which is the basis of the Clark amend­
ment- -may be adopted in the future. There are evidently
numerous obstacles that must be overcome before this can
be put into operation. Therefore, while opposed to the adop­
tion of the conference report in principle, I was glad to sign
it, in anticipation of the fact that at the beginning of next
session another effort will be made to include the idea that
is incorporated in the Clark amendment. This is the under­
standing of the conferees, and subcommittees will be ap­
pointed for that purpose.
[Here the gavel fell.]
Mr. DOUGHTON. Mr. Speaker, I ask unanimous consent
to proceed for 2 minutes.
The SPEAKER. Without objection, it is so ordered.
There was no objection.
Mr. DOUGHTON. Mr. Speaker, the Senate has receded on
the Clark amendment to the social-security bill, and on its
companion amendment, the Black amendment. These
amendments related to the preservation of employers' private-
annuity plans. It was understood by the conferees that after
further study, a program for preserving these plans could
Probably be formulated which would be free from the Clark
amendment's chief weaknesses. The Chairman of the Sen­
ate Finance Committee is appointing a subcommittee, and I
shall appoint a subcommittee of the Ways and Means Com­
mittee to consider this matter anid, if possible, to make
recommendations concerning it to the Congress at the begin­
ning of the session next January.
[Here the gavel fell.]
1935 CONGRESSIONAL RECORD-SENATE AUGUST 9 1935 12769

mwAG3 130K TMX IEOUS

12770 CONGRESSIONAL RECORD-SENATE AUGUST 9

The message further announced that the House had~

agreed to the report of the commiitte of conference on the
disagreeing votes of the two Houses on certain amend­
ments of the Senate to the bill (H. R. 7260) to provide for
the general welfare by establishing a system of Federal old-
age benefits, and by enabling the several States to make
more adequate provision for aged persons, dependent and
crippled 'hildren, maternal and child welfare, public health,
and the administration of their unemployment compensa­
tion laws; to establish a Social Security Board; to raise
revenue; and for other purposes.
 1935 CONGRESSIONAL RECORD-SENATE 12793
me. and also the Senator from Missouri (Mr. CLARxi, Wh*
has been most interested in the matter, to serve on such
committee. I believe the chairman of the Ways and MeanS
Committee of the House has appointed a similar Committee.
It would seem to me that ought to be agreeable to everyone.
I hope the report may be adopted so that this very important
piece of legislation may be disposed of.
Mr. CLARK. Mr. President, the Senator from Mississippi
[Mr. HARRISONI has expressed the hope that the proposal that
the Senate recede from the amendment may be agreeable
SOCIAL SECURrrY--CoNFERENCE REPORT to everyone. I have no hesitation In saying that so far as
Mr. HARRISON submitted the following report: I am concerned the suggestion is not agreeable. I believe
that the so-called " Clark amendment " was necessary, in
The committee of conference on the disagreeing votes of the two this bill to preserve the rights of something over 4.000,000
Houses on the amendments of the Senate nos. 17. 67. 68. 83. and American workmen interested in private pension schemes,
84 to the bill (H. R. 7260) to provide for the general welfare by and to protect those rights in case the social-security bill,
establishing a system of Federal old-age benefits, and by enabling itself should be declared to be unconstitutional by the
the several States to make more adequate provision for aged per­
sons, dependent and crippled children, maternal and child welfare. Supreme Court. I believe that only by some such method
public health, and the administration of their unemployment as I provided by the amendment can such a result be
compensation laws; to establish a Social Security Board; to raise accomplished.
revenue; and for other purposes, having met, after full and free On the other hand, I desire to say there could not have
conference, have agreed to recommend and do recommend to their
respective Houses as follows: That the Senate recede from said been a more devoted, a more intelligent, a more single-
amendments, minded effort put forth on behalf of the Senate than was put
PILAT HARIO. Kwforth by the Senate conferees on this matter. There have
WALER. F. GORGE,. been at work for several weeks, through the kindness of the
RommRT M. LA FOLLETTE. Jr., conferees, a committee of experts from the House and Sen­
Managers on the part of the Senate. ate committees, from the Treasury and Labor Departments,
Rt. L. DOUGHTON. and from outside sources, who have made an honest, con­
SAM B. H.M scientious attempt to work out a measure for preserving the
ALLKN T. TEzADwAr, private pension plan which would be satisfactory, to every­
IsA~c BAcHAR.cH, body and would meet the objections which were made on the
Managers on the part of the House. floor against the amendment, and at the same time carry
out the purposes of the amendment. These experts have
Mr. HARRISON. Mr. President, I desire to make a brief made very great headway toward such an agreement, to the
statement. It will be recalled that all other features of the extent that they have been able to agree on practically every
social-security bill, with the exception of the so-called question of principle involved, but there are many actuarial
" Clark amendment ", were agreed to and a partial report matters to be considered, many questions of detail to be ad­
was submitted some weeks ago to both bodies. The only judicated and perfected.
thing left in disagreement was the so-called " Clark amend- Yesterday the experts reported to the conferees that, while
ment ", together with the so-called " Black amendment ", they were in general agreement as to a proposal which ought
which dealt with the same subject matter. to be satisfactory to everyone, yet they were not able at this
The members of the conference committee have been time to set a day definite when they would be able to agree
unable to agree upon that amendment. We met many times. upon all the details. They believed they would be able to
There was a strong difference of opinion. The Senate con- present a report which would probably be satisfactory to
ferees in the best of faith tried to carry out the wishes of all concerned if the conference could be continued until the
the Senate with reference to the Clark amendment. We 19th of this month. But the conferees felt, in view of the
made every effort to get together upon some compromise long duration of their service and the fact that the matter
basis which would be fair to the Government, and at the had been sent back to the House on one occasion and a new
same time preserve the private pension plans, but we were appointment made, that they were not justified in longer
unable to do it. leaving the question open.
The experts representing the committee, together with While personally I would very much prefer to have the
outside experts, worked for many days trying to agree upon matter perfected at this time, yet in view of the fact that
some plan to be submitted to the conferees which might be the bill itself will. not go into effect until 1937. and, in view
substituted for the so-called " Clark amendment." They of the assurances given by the chairmen of the Finance
were unable to do this. Consequently the Senate conferees Committee of the Senate and the Ways and Means Commit­
finally receded from the Clark and Black amendments, tee of the House of an immediate, complete, and thorough­
However, to the conferees, the question of preserving the going study of the subject for the purpose of affording a
private pension plan was very appealing and their desire sufficient opportunity to preserve the rights of the employees
to preserve it, if possible, was very great, but the subject under the private pension plan, I do not feel Justified in
was so complicated that it was realized It would take too longer holding up the passage of this very important bill.
long to solve the problem and present a rational plan to Accordingly, with the assurance which has been given by
the present session of Congress. Therefore, while the Senate the conferees and by the two committees, I propose to vote
conferees receded, the Chairmen of the Ways and Means very reluctantly in favor of the adoption of the conference
committee of the House and of the Finance Committee of report.
the Senate were authorized to appoint a committee com- I ask unanimous consent that there be inserted in the
posed of five members from each committee to study the RECORD at this point the report of the committee of experts
private pension systems, together with the plan which was to the conferees on the social-security bill.
adopted by the House, which would be agreed to if the .The PRESIDING OFFCER. Without -objection, it Is so
report should be adopted, and to try to merge the two and ordered.
submit a report at the beginning of the next session of The report is as follows:
Congress.
8, 1933.
x ma sa, aoI Chkinn
theFinnceComitte,
ma sa,
theFinnceComitte, a Chirmn hatAUGUST
o
hat The undersigned (together with Messrs. Forster. Weaver, Turner,
I have appointed the Senator from Utah [Mr. KING!, the Latimer. and Hamilton) have met daily, beginning July 27, WAn
Senator from Georgia [Mr. GEORGIE!, the Senator from New have made progress toward formulating a program which we be..
Hrampshire [Mr. KEyES), and the Senator from Wisconsin tieve might result In the preservation of private annuity plans.,
[Mr. La FOLLETTE), who are members oftecneecof coferece
te wthhJwected
ithouttocontaining the amer'dment
In the Clark feature of tax exemption,
as being which was and
unconstitutional ob­
12794 CONGRESSIONAL RECORD-SENATE AUGUST 9
as likely to result In financial damage to the Government old-
age reserve account.
We have gone far enough to feel ressonably sure. that the device
of making grants to employers malntaining such plans is a work­
able one. We do not present a finished draft at this time. The
great number of complicated questions involved has made it Im­
possible for us to complete the task so quickly.
We feel that it is fairly likely that we could produce a draft by
Monday. August 19. In the Meantime, we must explore a few
remaining matters In policy, must do a considerable amount of
drafting, and then must have the finished product examined by
some other persons, both Government men and insurance men.
We have concentrated so long on this question that we should
have someone who is fresh on the subject check our draft closely.
Of course, there Is some likelihood that new questions will arise
In this checking process, requiring redrafting and delaying us till
much later than August 19.
After we finish our work, there will still be work to do;. for
our draft will contain several alternatives due to the fact that
there are a number of points in policy with respect to which we
feel in no position to reach a final conclusion. In the event that
the committee is In sympathy with the general objectives of the
draft, these points of policy should certainly be left to the judg­
ment of the committee.
W. H. WOODWARD.
THOMAS H. ELIOr.
LEONARD CALHOUN.
Mr. GEORGE. Mr. President, I desire merely to add to
what has already been said that the conferees on this bill
have labored very diligently to bring- forth an amendment
or an agreement which would carry into execution the action
taken by the Senate and which would preserve the private
annuity plans now in existence wherever, of course, such
plans could meet the approval of the Security Board.
I am especially anxious to say that the Senate conferees,
the majority of whom at least supported the Clark amend­
ment on the floor as I did, and the entire membership of the
Senate conference committee labored in season and out of
season In a very conscientious effort to bring out what we
believed to be a valuable addition to the social-security bill.
As the distinguished Senator from Missouri has said, much
valuable work has been done by the experts from the com­
mittees and from the Departments mentioned by him; and,
In principle, a program is in process of evolution which un­
doubtedly will greatly strengthen and in no sense weaken,
either from the financial point of view or the legal point of
view, the social security bill.
The committee has been designated by the chairman; and
it is a work which I am quite sure the committee will under­
take with much hope of final and ultimate success in the
perfection of the program which has been commenced by the
experts who have been called in, and who themselves have
labored so faithfully to solve the problem.
I may say that the conferees were appointed on the secur­
ity bill on the 20th of June, as I recollect; and from that
time until now the matter has had the attention of the
members of the conference committee or of a committee of
experts representlrng the two Houses, with the aid and assist­
ance of experts from the Treasury Department and the De­
partment of Labor. The conferees have reached the conclu­
sion that they could not longer delay a final report upon the
bill; hence, the agreement which has already been reported
to the Senate.
Mr. KING. Mr. President, as a continuation of the re­
marks made by the chairman of the committee, the Senator
from Mississippi [Mir. HARRISON], the Senator from Georgia
[Mr. GEORGE], and the Senator from Missouri [Mr. CLARK],
I desire to say that, as one of the conferees, I very reluc­
tantly assented to the conclusion which was reached.
I venture to say that the private annuity plan, when fully
considered, will be accepted by the House and the Senate and
by the country. I believe it will be a very useful and Im­
portant addition to the security bill, the report upon which
has just been submitted. I have no doubt that, with a com­
plete understanding of the beneficent provisions of the
annuity plan, more and more, will it be accepted in all the
industries of the United States, and less and less will be the
dependence upon the provisions of the bill which impose
obligations upon the Government.
The PRESIDING OFFICER. The question is on agree­
ing to the conference report,
The report was agreed to.
1935 CONGRESSIONAL RECORD-HOUSE AUGUST 12 12903

MESSAGE FROM THE SENATE

The message also announced that the Senate agrees to the

report of the committee of conference on the dis.agreeing
votes of the two Houses on the amendments of the Senate to
the bill (H. R. 7260) entitled "An act to provide for the gen­
eral welfare by establishing a system of Federal old-age
benefits, and by enabling the several States to make more
adequate provisions for aged persons, blind persons, depend­
ent and crippled children, maternal and child welfare, public
health, and the administration of their unemployment comn­
pensatioxx laws: to establish a Social Security Board; to raise
revenue; and for other purposes."
 13078 CONGRESSIONAL RECORD-SENATE AUGUST 14
There was published In the New York Times on Saturday.
August 10. a very fine analysis of the social-security bW.
in this connection I ask to have it inserted in the RECORD.
There being no objection. the article was ordered to be
printed in the RECORD, aLs follows:
IFrom the New York Times of Aug. 10, 19351
SuTm5IAxT or BxEnqIs PaovrDEi INqSociAL-SzcuarTY BEL&
WAsHiNcToN, August 9.-The social-security bill which went to
President Rtoosevelt today Is divided In Its essential provisions into
two parts, one dealing with the long-range plan of President Rooae­
velt for insuring Americans against "major hazards of our economic
mechanism ". and the other carrying special and Immediate aid to
the States In caring for dependent unemployables.
In the former group are provisions for old-age pensions and un­
employment Insurance, and In the latter are the sections dealing
with assistance to needy aged, dependent children, mcthers. crippled
children, the Indigent disabled, and the blind.
OLD-AGE ABMMSAN~Ca
The bill authorizes an appropriation of 649.750,000 for the current
fiscal year and so much as may be needed thereafter to assist the
States In caring for the aged, persons over 65 years of age. Grants
are authorized on a 50-50 basis, with the stipulation that the Fed­
eral Government's ehare shall In no case exceed 615 a month.
CONTRI5NTOUT OLD-AGZ PENSIONS
The bill provides a long-range old-age pension system, to be
financed by an Income tax on employees and a pay-roll tax on em­
ployers. starting In each case at 1 percent In 1937 and rising each
3 years until 1949. when each contribution Is to be 3 percent.
Under the operation of the system each qualified worker who
retires at the age of 65 years. but not prior to January 1, 1942. will
receive a monthly pension until his death. The rate of payment
will vary from 610 to $85 a month. G.epending upon the total
amount of wages earned by the beneficiary after December 31. 1936.
and before he reaches the retirable age. Lump-sum settlements
are to be made to estates of iqualified beneficiaries who die before
reaching the age of 65.
uNKMPWYMZ:WT ZNSUSAM9CE
The bill provides a Federal-State system of unemployment com­
pensation. based upon a pay-roll excise tax upon employers It
provides that on and after January 1. 1936. employers of eight or
more persons, or less If determined by the States, will be assessed
excise taxes on their pay rolls of 1 percent In 1936. 2 percent in
1937. 3 percent In 1938 and subsequent years.
The funds so collected to be paid to employees on period of
unemployment, according to laws and rules adopted by the States.
The bill allows the States the widest discretion In setting up
laws suited to their own requirements, allows a credit up to 90
percent to employers on account of taxes paid into strictly State
unemployment funds, and grants a Federal subsidy. $4,000,000 In
1936 and *49.000.000 annually thereftter, to wasist the States In
administering their laws,
AM TO OXPEMNDEN
CHUDIVN
The bill authorizes 624,750,000 for the current fiscal year and
such amounts as may be needed in future years to assist the
States In providing aid to dependent children. Grants are to be
made on the basis of one-third by the Federal Government and
two-thirds by the States, with the Federal allowance limited to $6
a month for a single child and $4 a month for any other child In
the same household,
AM TO MOTV[ZZJ A"D CIIL.DRW
The bill authorizes an appropriation of 63.800.000 a year too aId
the States In promoting the health of mothers and children,
.especially In rural areas and In areas suffering from severe
economic distress."
MEDICAL ChAR OF CZZLM CIKILD&=
It authorizes 62.850.000 a year for assistance In thle States in
providing surgical, corrective, and other services and facilities tor
crippled children.
AM TO HOMELES AND 2NELCLW= C=flDUZ
An appropriation of 61.500.000 Is authorized by the bill to aid
State welfare agenciesin caring for homaeless and neglected chidren,
aENAaIrrATION F07m~
The bill authorizes Federal expenditures of 6841.000 for the
fiscal years 1936 and 1937. 61.938.000 a year thereafter to supple­
ment State programs for vocational rehabilitation of the physically
disabled.
PUBLIC mELT
An annual appropriation of 68.000.000 Is authorized for assist­
ance to the States and their political subdivisions In WarintainIng
public healthk service.
$101M al TM 5OcIlu-saCllfl SIL AW TO T2iZ 3111D
Mr. HARRISON. Mr. president, it has j~US ~e My pleaS The bifl authorizes 68.000.000 to aId the States on a 80-50 basis
urewhe th
prsen
th Prsidnt ofthe
too bb prsentwhe
Preidet ~ ~
f th Untet Sttea In Administration
pensioning the Of
needy blind.
these provisions will be lodged In an mIns­
attached his; signature to the social-security bil. Inl my pendent bureau to be known as the " Social Security Boad," The
opinion, this will prove one of the most beneficial pieces of most immediately popular section of the entire bill lo that dealing
leiltoAeatd yt is dinistration.Isn ap with 1-mediate Prants to the St&"e of old-age assistance inset­
legits this
enactment, any sIr
a ii
haopy er porated as titl Iof the bill.
have had a part in Isearat WIa suehtotr Itprovides frthe payment of old-age assistance to pra
Seniators who participated are happy to have had a part In IL. over 6. grants to be made on equal matching basis the Federal
 1935 CONGRESSIONAL RECORD--SENATE 13079
Government furnishing 50 percent and the States matching these That all money paid Into the State unemployment fund shflhl
grants With another 50 percent. except that In no individual case be paid Into the unemployment trust fund in the rederal
shall the Fedieral Government's share exceed $15 a month. Treasury.
The Federal grants will be extended only~to those States whose That no person otherwise eligible shall be denied compensation
old-age assistance plans have been approved by the Social Security on the ground that he refused to take a job when his denial to
Board as complying with the requirements of the set. due to the fact that the position offered him Is vacant due directly
To be approved, a State plan must be State-wide in operation, to a strike, lockout, or labor dispute, or to the fact that wages
an individua to whom Is denied old-age assistance must have hours, and other working conditions are less favorable than those
the right to a fair hearing before a State agency, and some re- prevailing In the locality, or that as a condition of employment he
quirements are made as to reports, accounting. etc. The appli- must join a company union or refrain from joining any other
cant for assistance under this title must be at least 65, although organization.
the State Is empowered to make the limit as high as 70 until 1940. That the State law must contain a provision Indicating that any
Assistance shall not be denied to a person on the ground that rights. privileges, or Immunities conferred under it may be taken
he has not been resident long enough. If he has lived In the State away by the subsequent amendment or repeal of the law.
for I year immediately preceding application, or for any 5 years Sections relating to the other benefits are simple in their terms
out of the 9 immediately preceding, and merely provide the conditions under which the Government
PRZSSION PRVIE AT es may grant money to be used to supplement State funds In caring
for such dependent unenmployables as is specified.
The old-age pension plan carried In title rX provides for the The Social Security Board will be composed of three members, no
payments of cash benefits to every Individual who has attained more than two of whom shall belong to the same political party.
the age of 65 and has fulfilled certain requirements. The bene- They are to be appointed by the President, by and with the advice
fits are to be paid to him monthly as long as he lives. in an and consent of the Senate, each receiving a salary of $10,000 a year.
amount proportionate to the total amount of wages received by The terms of office, will be for 6 years. except that of the Brfft three
him for employment before he attained the retirable age. members appointed, one will hold office for 2 years. another for 4
For the purpose of building up sufficient moneys to pay the years, and the third for 6 years. The President la to designate the
benefits provided In this title, there Is created In the Federal chira of the BOard
Treasury a fund to which an annual appropriation beginning
with the fiscal year 1937 is authorized.
The amount of such appropriations will vary from year to year.
but the amount appropriated for any one year shall be deter­
mined in accordance with accepted actuarial principles end on
the basis of such mortality tables as the Secretary of the Treasury
shall from time to time adopt and which, at 3 percent Interest
compounded annually, shall be sufficient to build up the required
reserve.
TO reimburse the Treasury for these appropriations, the bill
Imposes a tax upon both the employer and the employee, based
upon the payments in wages to the latter. The tax on the em­
ployee is called an income tax, and the tax upon the employer is
known as an excise tax. The rate on each Is the same, beginning
with I percent for the calendar years 1937, 1938. and 1939; 11/2
percent for the calendar years 1940. 1941, and 1942; 2 percent for
1943. 1944, and 1945: 21/2 percent during 1946, 1947. and 1948: and
3 percent thereafter.
The bill requires that all of these taxes be collected from the
employer, but permits him to deduct the employee's part from
his wages. To insure collection of the tax, the employer is made
personally liable for It.
The tax on the employee Is to be assessed against only that
part of his wages less than $3,000 a year. Benefits are to be paid,
under the bill. In cash. The following table illustrates how the
plan will operate:

Pension based on years of

emplayment-
Average montbly salary -___ __

10 20 30 40

$10--------------------------------------­ 5$17.10 122.50 527.10 532.50

$100----------------------------------------- 22.10 32.150 42.10 51.25
$150--------------- ------------------------- 27.10 42.10 13.71 61.21
$2,00----------------------------------------- 32.10 11.25 61. 21 71.21
$210 -------------------------------------- _ 37.50 56.25 68.75 81.25

TAX FORJB
.Ta MURANfCX
The unemployment Insurance carried in title 31X levies on em­
ployers an excise tax payable annually, measured by the total
wages paid to his employees, and allows each taxpayer to credit
against the amount of his tax 90 percent of what he pays under
State laws. The tax Is imposed ostensibly for the privilege of hav­
ing more than eight Individuals in his employ.
The rate of tax Is specified at I percent for 1936, 2 percent for
1937. and 3 percent thereafter. No restrictions are laid on the
States as to the amount of unemployment insurance they may pay
or the classes Of workers who may be eligible.
The money so collected Is to be held In 'trust by the Federal
Treasury, with the respective State agencies administering Stats
unemployment-compensation laws as beneficiaries. Disbursements
are to be made out of the fund under the authority of State laws.
as approved by the Social Security Board, for the benefit of the
unemployed during periods of stress.
Ali money withdrawn from the unemployment trust fund by the
State authorities shall be used for the purpose of compensation,
and none of It for administrative costs. The Government appro­
priates, under the terms of the bill, a sum to carry on the ad­
minIstrative expenses. beginning with $4,000,000 for the year 1938
and granting $49,000,000 for subsequent Years.
sTATEZ' xATIruan is wxns
The States have the widest possible latitude to set up their
own unemployment compensation systems, with the following
general specific limitations:
That compensation shall be paid through public unemployment
officers of the State.
That no compensation shall be paid until after the expiration of
2 years from the time contributions start,
 [PUnILC-No. 27l1-74TH CoNGPEss]
[II. R. 7260]
AN ACT
To provide for the general welfare by establishing a system of Federal old-age
bknefits, and by enabling the several States to make more adequate provision
for aged pcr-sons, bfnd persons, dependent and crippled children, maternal
and child welfare, public health, and the administration of their unemploy­
mient compensation laws; to establish a Social Security Board; to raise revenue;
and for other purposes.
Bie it enacted by the Senate and House of Representatives of the
United States of Anwrica in Congress assembled,
TITLE I-GRANTS TO STATES FOR OLD-AGE
ASSISTANCE
APPROPRIATION

SECTION 1. For the purpose of enabling each State to furnish

financial assistance, as far as practicable under the conditions in such
State, to aged needy individ~uals, there is hereby authorized to be
appropriated for te fiscal year ending June 30, 1930, the sum of
$49,75.0,000, and there is hereby authorized to be appropriated for
each fiscal year thereafter a sum sufficient-to carry out the purposes
of this title. The sums made available under this section shal be
used for mnaking payments to States which have submitted, and had
a pproved by the Social Security Board established by Title VII
(hereinafter referred to as the "Board"), State plans for old-age
assistance.
STATE OLD-AGE ASSISTANCE PLANS

SEC. 2. (a) A State plan for old-age assistance must (1) provide
that it shall be in effect in all political subdivisions of the State, and,
if administered by them, be mandatory upon them; (2) provide for
financial participation by the State; (3) either provide for the estab­
lishment or designation of a single State agency to administer the
lplan, or provide for the establishment or designation of a single State
agency to supervise the administration of the plan; (4) provide for
granting to any individual, whose claim for old-age assistance is
(lenied, an opportunity for a fair hearing, before such State agency;
(5) provide such meth ods of administration (other than those relat­
ing to selection, tenure of office,-and compensation of personnel) as
are found by the Board to be necessary for the efficient operation of
the plan; (6) provide that the State agency will make such reports,
in such form and containing such in form~ation, as the Board may
from time to time require, and comply with such provisions as the
Board rhay from time to time find necessary to assure the correctness
and verification of such reports; and (7) provide that, if the State
or any of its political subdivisions collects frin. time estate of any
recipient of old-age assistance any amiount with respect to old-age
IPu%. 271.] 2
assistance furnished him under the plan, one-half of the net amount
so collected shall be promptly paid to the United States. Any pay­
ment so made shall be deposited in the Treasury to the credit of the
appropriation for the purposes of this title.
(b) The Board shall approve any plan which fulfills the conditions
specified in subsection (a), except that it shall not approve any plan
which imposes, as a condition of eligibility for old-age assistance
under the plan­
(1) An age requirement of more than sixty-five years, except
that the plan may imose, effective until January 1, 1940. an age
requrmnt of as much as seventy years* or
(2 )Ay residence requirement whick excludes any resident of
the who has resided therein five years during the nine years
immediately preceding the application for old-age assistance and
has resided ther-ein continuously for one year immnediately pre­
ceding the application; or
(3 citizenship requirement which excludes any citizen of
rAYMENT TO STATES

SEa. B. (a) From the sums appropriated therefor, the Secretary

of the Treasury shall pay to eac State which has an a pproved plan
for old-age assistance, for each quarter, beginning wit the quarter
comimencing July 1, 1935, (1) an amount, which shiall be used exclu­
sively as old-age assistance, equal to one-half of the total of the suims
expended during such quarter as old-age assistance under the State
plan with respect to each individual who at the time of such expendi­
ture is sixty-five years of age or older and is not an inmate of a
public institution, not counting so much of such expenditure with
respect to any individual for any month as exceeds $30, and (2) 5
per centum. of such amount, whch shall be used for paying the
costs of administering the State plan or for old-age assistance, or
both, and for no other purpose: Provided, That the State plan, in
order to be approved by the Board, need not provide for finan­
cial participation before July 1, 1937 by the State, in the case of
any State which the Board, upon a~pplication by the State and
after reasonable notice and opportunity for hearing to the State
finds is prevented by its constitution from providing such financiaf
participation.
(b) The method of computing and paying such amounts shall be
as follows:
(1) The Board shall, prior to the beginning of each quarter,
estimate the amount to be p ad toteSaefor such quarter under
the provisions of clause ()osuecin (a), such estimate to
be based on (A) a report fie yteSate containing its estimate
of the total sum t}e expne nsc ure nacrac
'with the provisions of succlueanstigtham ntpro
praed or made availablebyteSaeadisplicludvson
forisuch expenditures in suc quarteradisuhmotisls
than one-hal1f of the total su of such estimated expenditures, the
source or sources from which the difference is expected to be
derived, (B) records showing the number of aged individuals in
the State, and (C) such other investigation as the Board may find
necessary.
 3 [Pim 271.1

(2) The Board shall then certify to the Secretary of the

Treasury the amount so estimated by the Board, reduced or
increased, as the case may be, by any sum by which it finds that
its estimate for any prior quarter was greater or less than the
amount which should have been paid to the State under clause (1)
of subsection (a) for such quarter, except to the extent that such
sum has been applied to make te amount certified for any prior
quarter greater or less than the amount estimated by the Board
f or such prior quarter.
(3) The Secretary of the Treasury shall thereupon, through the
Division of Disbursement of the Treasury Department and prior
to audit or settlement by the General Accounting Office, pay to the
State2 at the time or times fixed by the Board, the amount so
certified, increased by 5 per centum.
OPERATION OF STATE PLANS

SEC. 4. In the case of any State plan for old-age assistance which
has been approved by the Board, if the Board, after reasonable
notice and opportunity for hearing to the State agency administering
or supervising the administration of such plan., 'nds-­
(1) that the plan has been so changed as to impose any age,
residence, or citizenshi~p requirement prohibited by secto 2 b)f
or that in the administration of the plan any such prohibited
requirement is imposed, with the knowledge of such -State agency,
in a substantial number of cases; or
(2) that in the administration of the plan there is a failure
to comply substantially with any provision required by section
2(Sa) to be included in the plan;,
the B~oard shall notify such State agency that further payments will
not be made to the State until the Board is satisfied that such pro­
hibited requirement is no longer so imposed, and that there is no
longer any such failure to comply. Until it is so satisfied it shall
make no further certification to the Secretary of the Treasury with
respect to such State.
ADMINISTRATION

SEC. 5. There is hereby authorized to be appropriated for the fiscal

year ending June 30, 1936, the sum of $250,000, for all necessary
expenses of the Board in administering the provisions of this title.
DEFINITION

SEC. 6. When used in this title the term " old-age assistance"
means money payments to aged individuals.

TITLE II-FEDERAL OLD-AGE BENEFITS

OLD-AGE RESERVE ACCOUNT

SECuION 201. (a) There is hereby created an account in the Treas­

ury of the United States to be known as the "Old-Age Reserve
Account " hereinafter in this title called the "Account ". There is
hereby authorized to be appropriated to the Account for each fiscal
[PuB. 271.14

year, beginning with the fiscal year ending June 80, 1937, an amount
sufficient as an annual premium to provide for the payments required,
under this title, such amount to be deternmined on a reserve basis in
accordance with accepted actuarial principles, and based upon such
tables of mortality as the Secretary of the Treasury shall from time to
time adopt, and upon an interest rate of 3 per centum. per annum
compounded annually. The Secretary of the Treasury shall submit
annually to the Bureau of the Budget an estimate of the appropri­
ations to be made to the Account.
(bc) It shall be the duty of the Secretary of the Treasury to invest
suhport-ion of the amounts credited to the Account as is not, in his
judgment, required to meet current withdrawals. Such investment,
may be made only in interest-bearing obligations of the United States
or in obligations guaranteed as to both 'principal and interest by
the UniteIT States. For such purpose such obligations may be
acquired (1) on original issue at par, or (2) by purchase of outstand­
ing obligations at the market price. The purposes for which obli­
gations of the United States may be issued under the Second Liberty
Bond Act, as amended, are here by extended to authorize the issuance
at par of special obligations exclusively to the Account. Such special
obligations shall bear interest at the rate of 8 per centum. per
annum. Obligations other than such special obligations may be
acquired for the Account only on such terms as to provide an invest­
ment yield of not less than 3 per centum per annum.
(c) Any obligations acquired by the Account (except special
obligations issued exclusively to the Account) may be sold at the
amaret price, and such special obligations may be redeemed at par
plus accrued interest.
(d) The interest on, aDnd the proceeds from the sale or redemption
of, any obligations held in the Account shall be credited to and form
a part of the Account.
(e) All amounts credited to the Account shall be available for
making payments required under this title.
(f) The Secretary of the Treasury shall include in his annual
report the actuarial status of the Account.
OLD-AGE BENEFIT PAYMENTS

SEc. 202. (a) Every qualified individual (as defined in section

210) shall be entitled to receive, with respect to the period beginning~
on the date he attains the age of sixty-five, or on J anuary 1, 1942,
whichever is the later, and ending on the date of his death, an old-
age benefit (payable as nearly as practicable in equal monthly
installments) as follows:
(1) If the total wages (as defined in section 210) determined
by the Board to have been paid to him, with respect to employ­
ment (as defined in section 210) after December 31, 1936, and
before heattained the ag-e of sixty-five, were not more than $3,000,
the old-age benefit shall be at a monthly rate of one-half of 1
per centum of such total wages;
(2) If such total wages were more than $3,000, the old-age
benefit shall be at a monthly rate equal to the sum of the
following:
(A) One-half of 1 per centum of $3,000; plus
 5 [Pus. 271.1

(B)Onetwefthof 1 y~er centum. of the amount by which

suh otlwages exed 3,000 and did not exceed $45,000;
(0)s On-twenty-fourth of 1 per centum. of the amount by
winch? such total wages exceeded -$45,000.
(b) In no case shall the monthly rate computed under subsection
(a) exceed $85.
(c) If the Board finds at an time that more or less than the
correct amount has theretofore been paid to any individual under
this section, then, under regulations made bk the Board, proper
adjustments shall be made in connection with subsequent payments
under this section to the same individual.
(d) Whenever the Board finds that any qualified individual has
received wages with respect to regular employment after he attained
the age of sixty -five, the old-age benefit payable to such individual
shall 'be reduced, for each calendar month in any part of which such
regular employment occurred by an amount equal to one month's
benefit. Such reduction shah be made, under regulations pre­
scribed by the Board, by deductions from one or more payments of
old-age benefit to such individual.
PAYMENTS UPON DEATH

SEC. 203. (a) If any individual dies before attaining the age of
sixty-five, there shall be paid to his estate an amount equal to 3y2
per centum. of the total wages determined by the Board to have been
paid to him, with respect to employment after December 31, 1936.
(b) If the Board finds that Ithe correct amount of the old-age
benefit payable to a qualified individual during his life under sec­
tion 202 was less than 3Y2 per centum. of the total wages by which
such old-age benefit was measurable, then there shall be paid to his
estate a sum equal to the amount, if any, by which such 3½2 per
centum. exceeds the amount (whether more or less than the correct
amount) paid to him duringhis life as old-age benefit.
(c) If the Board finds that the total amount paid to a qualified
individual under an old-age benefit during his life was less than the
correct amount to which he was entitled under section 202, and that
the correct amount of such old-age benefit was 31/2 per centum or
more of the total wages b~y which such old-age benefit was measur­
able, then there shall be paid to his estate a sum equal to the amount,
if any, by which the correct amount of the old-age benefit exceeds
the amount which was so paid to him during his life.
PAYMENTS TO AGED INDIVIDUALS NOT QUALIFIED FOR BENEFITS

SEC. 204. (a) There salbe paid in a lump sum to any individual
who, upon attaining th aeof sixty-five, is not a qualified indi­
vidual, an amount equa to3 2 prcentum of the total wages deter­
mined by the Board to hvbenpid to him, with respect to employ­
ment after December 31, 96 n before he attained the age of
six Afiter any individual becomes entitled to any payment under
subsection (a), no other payment shall be made under this title in
any manner measured by wages paid to him, except that any part of
any payment under subsection (a) which is not paid to him before
his death shall be paid to his estate.
(Pun. 271.j 6
AMOUNTS OF $500 OR LESS PAYABLE TO ESTATES

SEC. 205. If any amount payable to an estate under section 203

or 204 is $500 or less, such amount may, under regulations prescribed
by the Board, be p aid to the persons found by the Board to be
entitled thereto under the law of the State in which the deceased was
domiciled, without the necessit~y of compliance with the requirements
of law with respect to the administration of such estate.
OVERPAYMENTS DURlING LIFE

SEC. 206. If the Board finds that the total amount paid to a quali­
fied individual under an old-age benefit during his life was more
than the correct amount to which he was entitled under section 202,
and was 81/2 per centum or more of the total wages by which such
old-age benefit was measurable, then upon his death there shall be
repaid to the United States by his estate the amount, if any, by
which such total amount paid to him during his life exceeds which­
ever of the following is the greater: (1) Such 8½y per centumn, or (2)
the correct amount to which he was entitled under section 202.
METOD OF MAKING PAYMENTS

SEC. 207. The Board shall from time to time certify to the Sec­
retary of the Treasury the name and address of each person entitled
to receive a payment under this title, the amount of such payment,
and the time at which it should be made, and the Secretary of the
Treasury through the Division of Disbursement of the Treasury De­
partment, and prior to audit or settlement by the General Account­
ing Office, shall make payment in accordance with the certification
by the Board.
ASSIGNMENT

SEC. 208. The right of any person to any future payment under
this title shall not be transferable or assignable, at law or in equity,
and none of the moneys paid or payable or rights existing under this
title shall be subject to execution, levy, attachment, garnishment, or
other legal process, or to the operation of any bankruptcy or
insolvency lawv.
PENALTIES

SEc. 209. Whoever in any application for any payment under this
title makes any false statement as to any material fact, knowing such
statement to be false, shall be fined not more than $1,000 or impris­
oned for not more than one year, or both.
DEFINIrIONS

SEC. 210. When used in this title,­

('a) The term "4wagesO means all remuneration for employment,
including the cash value of all remuneration paid in any medium
other than cash; except that such term shall not include that part of
the remuneration which, after remuneration equal to $3,000 has been
psaid to an individual by an employer with respect to employment
during any calendar year, is p aid to such individual by such employer
with respect to employment during such calendar year.
 7 [Wmn 271.]

(b) The term " employment " means any service, of whatever
nature, performed within the U~nited States by an Iemployee for
his employer, except­
~1 Agricultural labor;
2Domestic service in a private home;
Casual labor not in the course of the employer's trade or
buiness;
(4) Service performed as an officer or member of the crew of a
vessel documented under the laws of the United States or of any
foreign country;
(5) Service performed in the employ of the United States
Government or of an instrumentality of the United States;
(6) Service performed in the employ of a State, a political sub­
division thereof, or an instrumentality of one or more States or
political subdivisions;
(7) Service performed in the employ of a corporation, com­
munity chest, fund, or foundation 7 origanized and operated exclu­
sively for religious, charitable, scientific, literary or educational
purposes, or for the pravention of cruelty to childiren or animals,
no part of the net earnings of which inures to the benefit of any
private shareholder or in ividual.
(c) The term " qualified individual " means any individual with
respect to whom it appears to the satisfaction of the Board that­
1~ lie is at least sixty-five years of age; and
2The total amount of -wages paid to him, with respect to em­
ployment after December 31, 1936, and before he attained the age
of sixty-five, was not less than $2,000; and
(3) Wages were paid to him, with respect to employment on
some five days after December 31, 1936, and before he attained the
age of sixty-five, each day being in a different calendar year.

TITLE III-GRANTS TO STATES FOR UNEMPLOYMENT

COMPENSATION ADMINISTRATION
APPROPRIATION

SECTION 301. For the purpose of assisting the States in the admin­
istration of their unemployment compensation laws, there is hereby
authorized to be appropriated, for the fiscal year ending June 30,
1936, the sum of $4,000,000, and for each fiscal year thereafter the
sum of $49,000,000, to be used as hereinafter provided.
PAYMENTS TO STATES

SEO. 302. (a) The Board shall from time to time certify to the
Secretary of the Treasury for payment to each State which has an
unemployment compensation law approved by the Board under Title
IX, such amounts as the Board determines to be necessary for the
proper administration of such law during the fiscal year in which
such payment is to be made. The Board's determination shall be
based on (1) the population of the State; (2) an estimate of the
number of persons covered by the State law and of the cost of proper
administration of such law; and (3) such other factors as the Board
finds relevant. The Board shall not certify for payment under this
IPMr. 271.1 8
section in any fiscal year a total amount in excess of the amount
appropriated therefor for such fiscal year.
(b) Out of the sums appropriated therefor, the Secretary"of the
Treasury shall, upon receiving a certification under subsection (a),
pay, through the Division of Disbursement of the Treasury Depart­
ment and mrior to audit or, settlement by the General Accountin
Office, to thie State agency charged with the administration of sueh
law the amount so certified.
FROVISIONS OF STATE LAWS

SEc. 803. (a) The Board shall make no certification for payment
to any State unless it finds that the law of such State, approved by
the Board under Title IX, includes provisions for­
(1) Such methods of administration (other than those relating
to selection, tenure of office, and compensation of personnel) as
are found by the Board to be reasonably calculated to insure full
payment of unemployment compensation when due; and
(2) Payment of unemployment compensation solely through
public employment offices in the State or such other agencies as
the Board may approve; and
(3) Opportunity for a fair hearing, before an impartial tribunal,
for all individuals whose claims for unemployment compensation
are denied; and
(4) The payment of all money received in the unemployment
fund of such State, immediately upon such receipt, to the Secretary
of the Treasury to the credit of the Unemployment Trust Fund
established by section 904; and
(5) Expenditure of all money requisitioned by the State agency
froni the Unemployment Trust Fund, in the paymenit of unemploy­
ment compensation, exclusive of expenses of aministration; and
(6) The making of such reports, in such form and containing
such information, as the Board may from time to time require,
and compliance with such provisions as the Board may from time
to time find necessary to assure the correctness and verification of
such reports; and
(7) TMaking available upon request to any agency of the United
States charged with the administration of public works or assist­
ance through public employment, the name, address, ordinary
occupation and employment status of each recipient of, unemploy­
ment compensation, and a statement of such recipient's rights to
further compensation under such law.
(b) Whenever the Board, after reasonable notice and opportunity
for hearing to the State agency charged with the administration of
the State law, finds that in the administration of the law there is­
(1) a denial, in a substantial number of cases, of unemployment
compensation to indiv iduals entitled thereto under such law; or
(2) a failure to comply substantially with any provision specified
insubsection (a) ;
the Board shall notify such State agency that further payments will
not he made to the Sate until the board is satisfied that there is no
longer any such denial or failure to comply. Until it is so satisfied.
it shall make no further certification to the Secretary of the Treasury
with respect to such State.
 9 [PMx 27LI

TITLE IV-GRANTS TO STATES FOR All) TO DEPENDENT

CHILDREN
APPROPRIATION
SECTION 401. For the purpose of enabling each State to furnish
financial assistance, as far as practicable under the conditions in such
State, to needy dependent children, there is hereby authorized to be
appropriated for the fiscal year ending June 30, 1936, the sum of
$24 750,000, and there is hereby authorized to be appropriated for
each fiscal'year thereafter a sum sufficient to carry out the purposes
of this title. The sums made available under this section shall be
used for making payments to States which have submitted, and had
approved by the Board, State plans for aid to dependent children.
STATE PLANS FOR AID TO DEPENDENT CHILDREN

SEC. 402. (a) A State plan for aid to dependent children must (1)
provide that it shall be in effect in all political subdivisions of the
State, and, if administered by them, be mandatory upon them; (2)
provide for financial participation by the State; (3) either provide
for the establishment or designation of a single State agency to
administer the plan, or provide for the establishment or designation
of a single State agency to supervise the administration of the plan;
(4) provide for granting to any individual, whose claim with respect
to aid to a dependent child is denied, an opportunity for a fair hearing
before such State agency; (5) provide such methods of administration
(other than those relating to selection, tenure of office, and compen­
sation of personnel) as are found by the Board to be necessary for
the efficient operation of the plan; and (6) provide that the State
agency will make such reports, in such form and containing such
information, as the Board may from time to time require, and
comply with such provisions as the Board may from time to time
find necessary to assure the correctness and verification of such
reports.
(b) The Board shall approve any plan which fulfills the condi­
tions specified in subsection (a), except that it shall not approve
any lplan which imposes as a condition of eligibility for aid to
dependent children, a residence requirement -whi-ch denies aid with
respect to any child residing in the State (1) who has resided
in the State for one year immediately preceding the application
for such aid, or (2) who was born within the State within one
year immediately preceding the application, if its mother has resided
in the State for one year immediately preceding the birth.
PAYMENT TO STATES

SEC. 403. (a) From the sums appropriated therefor, the Secretary
of the Treasury shall pay to each State which has an approved plan
for aid to dependent children, for each quarter, beginning with the
quarter commencing July 1, 1935, an amount, which shall be used ex­
clusively for carrying out the State plan, equal to one-third of the
total ofthe sums expended during such quarter under such plan,
not counting so much of such expenditure with respect to any de-
Pub. No. 271-2
[PuB. 271.I 10

pendent child for any month as exceeds $18, or if there is more than
one dependent child in the same home, as exceeds $18 for any month
with respect to one such dependent child and $12 for such month
with respect to each of the other dependent children.
(b) The method of computing and paying such amounts shall
be as -follows:
(1) The Board shall, prior to the beginning of each quarter,
estimate the amount to be paid to the State for such quar­
ter under the provisions of subsection (a), such estimate to be
based on (A) a report filed by the State containing its estimate
of the total sum to be expended in such quarter in accordance
with the provisions of such subsection an d stating the amount
appropriated or made available by the State and its political sub­
divisions for such expenditures in such quarter, and if such amount
is less than two-thirds of the total sum of such estimated expendi­
tures, the source or sources from which the difference is expected
to be derived, (B) records showing the number of dependent
children in the State, and (C) such other investigation as the
Board may find necessary.
(2) The Board shall then certify to the Secretary of the
Treasury the amount so estimated by the Board, reduced or
increased, as the case may be, by any sumn by which it finds
that its estimate for any prior quarter was greater or less than
the amount which should have been paid to the State for such
quarter, except to the extent that such sum has been applied
to make the amount certified for any prior quarter greater or
less than the amount estimated by the Board for such prior
quarter.
(8) The Secretary of the Treasury shall thereupon, through the
Division of Disbursement of the Treasury Department and prior
to audit or settlement by the General Accounting Office, pay to the
State at the time or times fixed by the Board, the amount so
certifid.
OPERATION OF STATE PLANS

SEc. 404. In the case of any State plan for aid to dependent chil­
dren which has been approved by the Board, if the Board, after
reasonable notice and opportunity for hearing to the State agency
administering or supervising the administration of such plan, finds­
(1) that the plan has been so changed as to impose any residence
requirement prohibited by section 402 (b), or that in the adminis­
tration of the plan any such prohibited requirement is imposed,
with the knowledge of such State agency, in a substantial number
of cases; or
(2) that in the administration of the plan there is a failure to
comply substantially with any provision required by section 402 (a)
to be included in the plan*
the Board shall notify sucA State agency that further payments
will not be made to the State until the Board is satisfied that such
prohibited requirement is no longer so imposed, and that there is no
ronfer any such failure to comply. Until it is so satisfied it shall
make no further certification to the Secretary of the Treasury with
respect to such State.
 11 (PuB. 271.d

ADMINISTRATION

SEo. 405. There is hereby authorized to be appropriated for the

fiscal year ending June 30, 1936, the sum of $250,000 for all necessary
expenses of the Board in administering the provisions of this title.
DEITNITIONS

SEC. 406. When used in this title­

(a) The term "dependent child" means a child under the age of
sixteen who has been deprived of parental support or care by reason
of the death, continued absence from the home, or physical or mental
incapacity of a parent, and who is living with his father, mother,
grandfather, grandmother brother, sister, stepfather, stepmother,
stepbrother, stepsister, uncle or aunt in a place of residence main­
tained by one or more of sucI relatives as his or their own home;
(b) The term "aid to dependent children" means money payments
with respect to a dependent child or dependent children.
TITLE V-GRANTS TO STATES FOR MATERNAL AND
CHILD WELFARE
PART 1-MATERNAL AND CH-ILD HE.ALTH SERVICES

APPROPRIATION

SECTION 501. For the purpose of enabling each State to extend and
improve, as far as practicable under the conditions in such State,
services for promoting the health of mothers and children, e cal
in rural areas and in areas suffering from severe economic Sistress,
there is hereby authorized to be appropriated for each fiscal year
beginning with the fiscal year ending June 30, 1936, the sum 0
$3,800,000. The sums made available under this section shall be used
for making payments to States which have submitted, and had
approved by the Chief of the Children's Bureau, State plans for such
services.
ALLO)TMENTS TO STATES

SEo. 502. (a) Out of the sums appropriated pursuant to section

501l for each fiscal year the Secretary of Labor shall allot to each
State $20 000, and such part of $1,800,000 as he finds that the number
of live births in such State bore to the total number of live births
in the United States, in the latest calendar year for which the Bureau
of the Census has available statistics.
(b) Out of the sums appropriated pursuant to section 501 for each
ficalyear the Secretary of a rshall allot to the States $980,000
(in adtion to the allotments made under subsection (a)), according
to the financial need of each State for assistance in carrying out its
State plan as determ-ined by him after taking into consideration the
number OF live births in such State.
(c) The amount of any allotment to a State under subsection (a)
for any fiscal year remaining unpaid to such State at the end of such
fiscal year shall be available for payment to such State under section
504 until the end of the second succeeding fiscal year. No payment
[PuB. 271.] 12
to a State under section 504 shall be made out of its allotment for
any fiscal year until its alloteniit for the preceding fiscal year has
been exhausted or has ceased to be available.
APPROVAL OF STATE PLANS

SEc. 503. (a) A State plan for maternal and child-health services
must (1) provide for financial participation by the State; (2) pro­
vide for the adcini~istration of the plan by the State health agency
or the supervision of the administration of the plan by the State
health agency; (3) provide such methods of administration (other
thntos eatn toslcin eue of office, and compensation of
personnel) as are necessary for te efficient operation of the plan;
(4) provide that the State health agecy -will make such reports
in such form and containing such infomtoas the Secretary oi
Labor may from time to time require, and comply with such pro­
visions as he may from time to time find necessary to assure the
correctness and verification of such reports; (6) rovide for the
extension and improvement of local maternal and cryild-health serv­
ices administered by local child-health units; (6) provide for cooper­
ation with medical, nursing, and welfare groups and organizations;
and (7) provide for the cdevelopnment of demonstration services in
needy aleas and amiong groups iii special need.
(b) Thre Chief of th Chidren's Bureau shall approve any plan
which fulfills the conditions specified in subsection (a) and shuall
thereupomi notify the Secretary of Labor and the State health agency
of his approval.
PAYMENT TO STATES

SEc. 5041. (a) From. the sums appropriated therefor and the allot­
ment~s available under sectioni 502 (a), the Secretary of the Treasury
shall pay to each State which has an approved plan form maternlD l
and child-health services, for each quarter, beginning with the
quarter commencing July 1, 1936, an amount, which shall be used
exclusively for carrying out the State plan, equal to one-half of the
total sumi expended during such quarter for carrying out such plan.
(b) The method of computing and paying such amounts shall be
as follows:
(~1) The Secretary of Labor shall, prior to the beginning of
eachi quarter, estimate the amount to be paid to the State for such
quarter under the provisions of subsection (a), such estimate to
be based on (A) a report. filed by the State containing its esti­
mate of the total sum to be expended in such quarter in accord­
ance with the provisions of such subsection and stating the amount
appropriated or made available by the State and its political sub­
divisions for such expenditures in such quarter, and if such amount
is less than one-half of the total sum of such estimated expendi­
tures, the source or sources from which the difference is expected
to be derived, and (B) such investigation as he may find necessary.
(2) The Secretary of Labor shall then certify the amount so
estimated by him to the Secretary of the Treasury reduced or
increased, as the case may be, by any sum by which thie Secretary
of Labor finds that his estimate for any prior quarter was greater
or less than the aniount which should have been paid to the State
 13 [Puna. 271.1

for such quarter except to the extent that such sum has been
ap pled to make the amount certified for any prior quarter greater
or less than the amount estimated by the Secretary of Labor for
such prior quarter.
(3) The Secretary of the Treasury shall thereupon, through
the Division of Disbursement of the Treasury Department and
pri.or to audit or settlement by the General Accounting Office, pay
to the State, at the time or times fixed by the Secretary of Labor,
the amount so certified.
(c) The Secretary of Labor shall from time to timle certify to the
Secretary of the Treasury the amounts to be paid to the States from
the allotments available under section 502 (b), and the Secretary of
tile Treasury shall, through the Division of Disbursement of the
Treasury Department and prior to audit or settlement by the General
Accountino' Office, make payments of such amounts from such allot­
ments at ttie time' or times specified by the Secretary of Labor.
OPERATION OF STATE PLANS

SEC. 505. In the case of any State plan for maternal and child-
health services which has been a pproved by the Chief of tile Chil­
dren's Bureau, if the Secretary oLabor, after reasonable notice and
opportunity for hearing to the State agency administering or super­
vising the administration of such plan, finds that in the administra­
tion of the plan there is a failure to comply substantially with any
provision required by section 503 to be included in the plan, hie shall
notify such State agency that further payments will not be made t~o
the State until lie is satisfied that there is no longer any uch failure
to comply. Until he is so satisfied he shall make no further certifica­
tion to the Secretary of the Treasury with respect to such State.

PArT 2-SERVICES FOR CRIPPLED CHILDREN

APPROPRIATION

SEC. 511. For the purpose of enabling each State to extend and
improve (especially in rural areas and in areas sufferin - from severe
economic distress) as far as practicable under the conditions in such
State, services for locating crippled children, and for providing med­
ical, s'urgical, corrective, and other services and care, and facilities
for diao'osis, hospitalization, and aftercare, for children who are
crippled or who are sufferin~y from conditions which lead to crip­
pling, there is hereby authorized to be appropriated for each fiscal
year, beginning with the fiscal year ending June 30, 1936, the sum of
$2,850,000. The sums made available under this section shall be
used for making payments to States which have submitted, and had
iproved. by the' Chief of the Children's Buireau, State plans for
suTservices.
ALLOTMENTS TO STATES

SEC. 512. (a) Out of the sums appropriated pursuant to section

511 for each fiscal year the Secretary of Labor shall allot to each
State $20,000, and the remainder to the States according to the need
of each State as determined by him after taking into consideration
[PuB. 271.1 14

the number of crippled children in such State in need of the services

referred to in section 511 and the cost of furnishing such services
to them.
(b) The amount of any allotment to a State under subsection (a)
for any fiscal year remaining unpaid to such State at the end of
such fiscal year shall be available for payment to such State under
section 514 until the end of the second succeeding fiscal year. No
payment to a State under section 514 shall be made out ofits allot­
ment for any fiscal year until its allotment for the preceding fiscal
year has been exhausted or has ceased to be available.
APPROVAL OF STATE PLANS

SEC. 513. (a) A State p lan for services for crippled children must
1 1) provide for financial p articipation by the State; (2) provide
or the administration of the plan by a State agency or the super­
vision of the administration of the plan by a State agency; (3)
provide such methods of administration (other than those relating
to selection, tenure of office, and compensation of personnel) as are
necessary for the efficient operation of the 'plan; (4) provide that
the State agency will make such reports, in such frm and con­
taining such information, as the Secretary of Labor may from time
to time require, and comply with such provisions as he may from
time to time find necessary ~to assure the correctness and verification
of such reports; (5) provide, for carrying out the, purposes specified
in section 511; and (6)~provide for cooperation with medical, health,
nursing, and welf are groups and organizations and with any agency
in such State charged with administering State laws providing for
vocational rehabilitation of physically handicapped children.
(b) The Chief of the Children's bureau shall approve anyI plan
which fulfills the conditions specified in subsection (a> and shall
thereupon notify the Secretary of Labor and the State agency of
his approval.
PAYMENT TO STATES

SEo. 514. (a) From the sums appropriated therefor and the allot­
ments available under section 512, the Secretary of the Treasury
shall pay to each State which has an approved plan for services for
crippled children, for each quarter, beginning with the quarter com­
mencing July 1 1935, an amount, which shall be used exclusively for
carrying out the State plan, equal to one-half of the total sum
expended during such quarter for carrying out such plan.
(b) The method of computing and paying such amounts shall be
as follows:
(1) The Secretary of Labor shall, prior to the beginning of each
quarter estimate the amount to be paid to the State for such quar­
ter undier the provisions of subsection (a), such estimate to be
based on (A) a report filed by the State containing its estimate of
the total sum to be expended in such quarter in accordance with
theproisinsof uchsusection and stating the amount appro-
p ritedorade vaiabl bythe State and its political subdivisions
for uchexpnditresin uchquarter, and if such amount is less
thanonehal of he ota su of such estimated expenditures,
the source or sources from which the difference is expected to be
derived, and (B) such investigation as he may find necessary.
 15 tPuB. 271.!

(2) The Secretary of Labor shall then certify the amount so esti­
mated by him to the Secretary of the Treasury, reduced or
increased, as the case may be, by any sum by which the Secretary
of Labor finds that his estimate for any prior quarter was greater
or less than the amount -which should have been paid to the State
for such quarter except to the extent that such sum has been
appled to make tle amount certified for any prior quarter greater
or less than the amount estimated by the Secretary of Labor for
such pirqater.
(30 h ertr of the Treasury shall thereupon, through the
Diviso oDibre nt of the Treasury Department and prior
to audit or settlement by the General Accounting Office,_pay to the
State, at the time or times fixed by the Secretary of Labor, the
amount so certified.
OPERATION OF STATE PLANS

SEC. 515. In the case of any State plan for services for, crippled
children which has been approved by the Chief of the Children's
Bureau if the Secretary of Labor, after reasonable notice and oppor­
tunity lor hearing to the State agency administering or supervisino'
the administration of such plan, fnds that in the administration o'
the plan there is a failure to comply substantially with any provision
required by section 513 to be included in the plan, he s al notify
such State agency that further payments will not be made to the
State until he is satisfied that there is no longer any such failure to
comply. Until he is so satisfied he shall make no further certifica­
tion to the Secretary of the Treasury ivith respect to such State.
PART 8-CHILD-WELFARE SERVICES

SEC. 521. (a) For the purpose of enabling the United States,
through the Children's Bureau, to cooperate with State public-
welfare agencies in establishing, extending, and strengthening,
especially in predominantly rural areas, public-welfare services
(hereinafter in this section referred to as " child-welfare serv­
ices ") for the protection and care of homeless, dependent,
and neglected children, and children in danger of becoming
delinquent there is hereby authorized to be appropriated for
each fiscal year, beginning with the fiscal year ending June
30, 1936, the sum Of $1,500,000. Such amount shall be allotted
by the Secretary of Labor for use by cooperating State public-welfare
agencies on the basis of plans developed jointly by the State affency
and the Children's Bureau, to each State, $10,000, and the remainder
to each State on the basis of such plans, not to exceed such part of
the remainder as the rural population of such State bears to the total
rural population of the United States. The amount so allotted shall
be expended for payment of part of the cost of district, county or
other local child-welfare services in areas predominantly rural, and
for developing State services for the encouragement and assistance
of adequate methods of community child-welfare organization in
areas predominantly rural and other areas of special need. The
amount of. any allotment to a State under this section for any fiscal
year remaining unpaid to such State at the end of such fiscal year
[Pun. 271.1 16
shall be available for payment to such State under this section until
the end of the second succeeding fiscal year. No payment to a State
under this section shall be ma de out of its allotment for any fiscal
year until its allotment for the preceding fiscal year has been
exhausted or has ceased to be available.
(b) From the sums appropriated therefor and the allotments
available under subsection (a) the Secretary of Labor shall from
time to time certify to the Secretary of the TI~reasury the amounts to
be paid to the States, and the Secretary of the Treasury shall, through
the Division of Disbursement of the Treasury Department and prior
to audit or settlement by the General Accounting Office, make pay­
ments of such amounts from such allotments at the time or times
specified by the Secretary of Labor.
PART 4--VOCATIONAL REHABILITATION

SEC. 531. (a) In order to enable the United States to cooperate

with the States and Hawaii in extending and strengthening their
programs of vocational rehabilitation of the physically disable, and
to continue to carry out the provisions and purposes of the, Act
entitled "An Act to provide for the promotion of vocational rehabili­
tation of persons disabled in industry or otherwise and their return
to civil employment", approved June 2, 1920, as amended (U. S. C.,
title 29, ch. 4; U. S. C., Supp. VII, title 29, secs. 31, 32, 34, 35, 37, 39,
and 40), there is hereby authorized to be appropriated for the fiscal
years ending June 30, 1936, and June 30, 1937, the sum of $841,000
for each such fiscal year in addition to the amount of the existing
authorization, and for each fiscal year thereafter the sum of
$1,938,000. Of the sum-s appropriated pursuant to such authorization
for each fiscal year, $5,000 shall be apportioned to the Territory of
Hawaii and the remainder shall be apportioned among the several
States in the manner provided in such Act of June 2, 1920, as
amended.
(b) For the administration of such Act of June 2, 1920, as
amended, by the Federal agency authorized to administer it,
there is hereby authorized to be appropriated for the fiscal years
ending June 30, 1936 and June 30, 1937, the sum of $22,000 for each
such fiscal year in a~idtion to the amount of the existing authoriza­
tion, and for each fiscal year thereafter the sum of $102,000.
PARTZ~-ADMIAIMTRATION

SEC. 541. (a.) There is hereby authorized to be appropriated for

the fiscal year ending June 30, 1936, the sum of $425,000, for all
necessary expenses of the Children's Bureau in administering the
provisions of this title, except section 531.
(b) The Children's Bureau shall make such studies and investi­
gations as will promote the efficient administration of this title,
except section 531.
(c) The Secretary of Labor shall include in his annual report to
Congress a full account of the administration of this title, except
section 531.
 17 [MU. 271.1

TITLE VI-PUBLIC HEALTH WORK

APPROPRIATION

SECTION 601. For the purpose of assisting States, counties, health

districts, and other political subdivisions of the States in establish­
ing and maintaining adequate public-health services, including the
training of personnel for State and local health work, there is hereby
authorized to be appropriated for each fiscal year, beginning wit
the fiscal year ending June 30, 1936, the sum of $8,000,000 to be used
as hereinafter provided.
STATE AND LOCAL PUBLIC HEALTH SERVICES

SEC. 602. (a) The Surgeon General of the Public Health Service,
with the aproval of the Secretary of the Treasury, shall, at the
beginning of each fiscal year, allot to the States the total of (1) the
amount appropriated for such year pursuant to section 601; and
(2). the amounts of the allotments under this section for the pre­
ceding fiscal year remaining unpaid to the States at the end of such
fiscal year. The amounts of such allotments shall be determined
on the basis of (1) the population; (2) the special health .problems;
and (3) the financial needs; of the respective States. Upon making
such allotments the Surgeon General of the Public Health Service
shall certify the amounts thereof to the Secretary of the Treasury.
(b) The amount of an allotment to any State under subsection
(a) for any fiscal year, remaining unpaid at the end of such fiscal
year shall be available for allotment to States under subsection (a)
for tle succeeding fiscal year, in addition to the amount appropriated
for such Tear.
(c) Prior to the beginning of each quarter of the fiscal year, the
Surgeon General of the Public Health Service shall, with the
approval of the Secretary of the Treasury, determine in accordance
with rules and regulations previously prescribed by such Surgeon
General after consultation with a conference of the State and Terri­
torial health authorities the amount to be paid to each State for
such quarter from the alZotment to such State, and shall certify the
amount so determined to the Secretary of the Treasury. Upon
receipt of such certification the Secretary of the Treasury shall,
through the Division of Disbursement of the Treasury Department
and prior to audit or settlement by the General Accounting Office,
pay in accordance with such cetfcation.
(d). The moneys so paid to any State shall be expended solely in
carrying out the purposes.secified in section 601, and in accordance
with plans presented beys thehealth authority of such State and
approved by the Surgeon General of the Public Health Service.
INVESTIGATIONS

SEC. 603. (a) There is hereby authorized to be appropriated for

each fiscal year, beginning with the fiscal year ending June 30, 1936,
the sum of $2,000,000 for expenditure by the Public Health Service
for investigation of disease and problems of sanitation (includin
the printing and binding of the findings of such investigations), and
for the pay and allowances and traveling expenses of personnel of
IPuB. 271.1 18
the Public Health Service, including commissioned officers, engaged
in such investigations or detailed to cooperate with the health au­
thorities of any State in carrying out the pupss pcfied in sec­
tion 601: Provided, That no personnel of te Public Health Service
shall be detailed to cooperate with the health authorities of any State
except at the request of the proper authorities of such State.
(b) The personnel of the Public Health Service paid from any
appropriation not made pursuant to subsection (a) may be detailed
to assist in carrying out the purposes of this title. The appropria­
tion from which they are paid shall be reimbursed from the appro­
priation made pursuant to subsection (a) to the extent of their sal­
aries and allowances for services performed while so detailed.
(c) The Secretary of the Treasury shall include in his annual
report to Congress a full account of th administration of this title.
TITLE VII-SOCIAL SECURITY BOARD
ESTABLISHMENT

SECTION 701. There is hereby established a Social Security Board

(in this Act referred to as the "Board") to be composed of three
members to be appointed by the President, by and with the advice
and consent of the Senate. During his term of membership on the
Board, no member shall engage in any other business, vocation, or
employment. Not more than two of the members of the Board
shall be members of the same political party. Each member shall
receive a salary at the rate of $10,000 a year and shall hold office for
a term of six years, except that (1) any member appointed to fill
a vacancy occurring prior to the expiration of the term for which
his predecessor was appointed, shall be appointed for the remainder
of such term; and (2) the terms of office of the members first taking
office after the date of the enactment of this Act shall expire, as
designated by the President at the time of appointment, one at the
end of two years, one at the end of four years, and one at the end
of six years, after the date of the enactment of this Act. The Presi­
dent shall designate one of the members as the chairman of the
Board.
DUTIES OF SOCIAL SECURITY BOARD

SEC. 702. The Board shall perform the duties imposed upon
it by this Act and shall also have the duty of studying and making
recommendations as to the most effective methods of providing eco­
nomic security through social insurance, and as to legislation and
matters of administrative policy concerming old-age pensions, unem.­
ploymnent compensation, accident compensation, and related subjects.
EXPENSES OF TME BOARD

SEC. 70O3. The Board is authorized to appoint and fix the compen­
sation of such officers and employees, and to make such expenditures,
as may be necessary for carrying out its. functions under this Act.
Appointments of attorneys and experts may be made without regard
to the civil-service laws.
 19 [PVs. 271.1

RF.PORTS

SEC. 7'04. The Board shall make a full report to Congress, at

the beginning of each regular session, of the administration of the
functions with which it is charged.
TITLE VIII-TAXES WITH RESPECT TO EMPLOYMENT
INCOME TAX ON EMPLOYEES

SECTION 801. In addition to other taxes, there shall be levied

collected and paid upon the income of every individual a tax equal
to the following percentages of the wages (as defined in section 811)
received by him after December 31, 1936 with respect to employ­
ment (as defined in section 811) after such date.:
(1) With respect to employment during the calendar years 1937,
1938, and 1939, the rate shal1 be 1 per centum.
(2) With respect to employment during the calendar years 1940,
1941, and 1942, the rate shall be 1Y2 per centum.
(3) With respect to employment during the calendar years 1943,
1944, and 1945, the rate shall be 2 per centum.
(4) With respect to employment during the calendar years 1946,
1947, and 1948, the rate shall be 2½2 per centum.
(5) With respect to employment after December 31, 1948, the rate
shall be 3 per centum.
DEDUCTION OF TAX FROM WAGES

SEC. 802. (a) The tax imposed by section 801 shall be collected by
the employer of the taxpayer, by deducting the amount of the tax
from the wages as and when p aid. Every employer required so to
deduct the tax is hereby made liable for the payment of such tax, and
is hereby indemnified against the claims and demands of any person
for the amount of any such payment made by such employer.
(b) If more or less than the correct amount of tax imposed by sec­
tion 801 is paid with respect to any wage payment, then, under regula­
tions made under this title, proper adjustments, with respect both to
the tax and the amount to be deducted, shall be made, without
interest, in connection with subsequent wage payments to the sa-me
individual by the same employer.
DEDUCTIB3ILITY FROM INCOME TAX

SEC. 803. For -thepurposes of the income tax imposed by Title I of

the Revenue Act of 1934 or by any Act of Congress in substitution
therefor, the tax imposed by section 801 shall not be allowed as a
deduction to the taxpayer in computing his net income for the year
in which such tax is deducted from his wages.
EXCISE TAX ON EMPLOYERS

SEC. 804. In addition to other taxes, every employer shall pay an

excise tax, with respect to having individuals in his employ, equal to
the following percentages of the -wages(as defined in section 811 )"paid
iI'uu. 211.1 20
by him after December 31, 1936, with respect to employment (as
defined in section 811) after such date:
(1) With respect to employment during the calendar years 1937,
1938, and 1939, the rate shall be 1 per centum.
(2) With respect to employment during the calendar years 1940,
1941, and 1942, the rate shall be 11/2 per centum.
(3) With respect to employment Suring the calendar years 1943,
1944, and 1945, the rate shall be 2 per centum.
(4) With respect to employment during the calendar years 1946,
1947. and 1948, the rate shall be 21/2 per centum.
(5) With respect to employment after December 31, 1948, the rate
shall be 3 per centum.
ADJUSTMENT OF EMPLOYERS'I TAX

SEC. 805. If more or less than the correct amount of tax imposed
by section 804 is paid with respect to any wage payment, then, under
regulations made under this title, proper adjustments with respect to
the tax shall be made, without interest, in connection with subse­
quent wage payments to the same individual by the same employer.
REFUNDS AND DEFICIENCIES

SEC. 806. If more or less than the correct amount of tax imposed
by section 801 or 804 is paid or deducted with respect to any wage
payment and the overpayment or underpayment of tax cannot be
adjusted under section 802 (b) or 805 the amount of the overpayment
shall be refunded and the amount of the under~payment shall be col­
lected, in such manner and at such times (subject to the statutes of
limitations properly applicable thereto) as may be prescribed by
regulations made under this title.
COLLECTION AND PAYMEN~T OF TAXES

SEC. 807. (a) The taxes imposed by this title shall be collected by
the Bureau of Internal Revenue under the direction of the Secretary
of the Treasury and shall be paid into the Treasury of the United
States as internal-revenue collections. If the tax is not paid when
due, there shall be added as part of the tax interest (except in the
case of adjustments made in accordance with the provisions of sec­
tions 802 (b) and 805) at the rate of one-half of 1 per centum per
month from the date the tax became due until paid.
(b) Such taxes shall be collected and paid in such manner at such
times, and under such conditions, not inconsistent with this title
(either by making and filina, returns, or by stamps, coupons, tickets,
books, or other reasonable aevices or methods necessary or helpful
in securing a complete and p roper collection and payment of the tax
or in securing proper identification of the taxpayer), as may be pre­
scribed by the Commissioner of Internal Revenue, with the approval
of the Secretary of the Treasur~y.
(c) All provisions of law, including penalties, applicable with
respect to any tax imposed by section 600 or section 800 ol the
Revenue Act of 1926, and the provisions of section 607 of the Revenue
Act of 1934, shall, insofar as applicable and not inconsistent with
the provisions of this title,9 be applicable with respect to the taxes
imposed by this title.
 21 WMuD
271.]

(d) In the payment of any tax under this title a fractional part
of a cent shall be disregarded unless it amounts to one-half cent or
more, in which case it shall be increased to 1 cent.
RULES AND REGULATIONS

SEC. 808. The Commissioner of Internal Revenue, with the ap­

proval of the Secretary of the Treasury, shall make and pub)ish rules
and regulations for the enforcement of this title.
SALE OF STAMPS BY POSTMASTERS

SEC. 809. The Commissioner of Interial Revenue shall fuTrnish to

the Postmaster General without prepayment a suitable quantity of
stamps, coupons, tickets, books, or other devices prescribed by the
Commissioner under section 807 for the collection or payment of any
tax imposed by this title, to be distribut~ed to, and kept on sale by, all
post offices of the first and second classes, and such post offices of the
third and fourth classes as (1) are located in county seats, or (2)
are certified by the Secretary of the Treasury to the Postmaster
General as necessary to the proper administration of this title. The
Postmaster General may require each such postmaster to furnish
bond in such increased amount as he may from time to time deter­
mine, and each such postmaster shall deposit the receipts from the
sale of such stamps, coupons, tickets books, or other devices, to the
credit of and render accounts to, the Postmiaster General at such
times and in such form as the Postmaster General may by regula­
tions prescribe. The Postmaster General shall at least once a month
transfer to the Treasury as internal-revenue collections all receipts
so deposited together with a statement of the additional expendi­
tures in the District of Columbia and elsewhere incurred by the
Post Office Department in performing the duties imposed upon said
Department by this Act, and the Secretary of the Treasury is hereby
authorized and directed to advance from time to timie to the credit
of the Post Office Department from appropriations made for the
collection of the taxes imposed by this title,, such sums as ma; be
required for such additional expenditures incurred by the ost
Office Department.
PENALTIES

SEC. 819. (a) Whoever buys, sells, offers for sale, uses, transfers,
takes or gives in exchange, or pledges or gives in pledge, except as
autoriedin this title or in regulations made pursuant thereto, any
stamp,' coupon, ticket, book, or other device, prescribed by the Com­
missioner of Internal Revenue under section 807 for the collection or
payment of any tax imposed by this title, shall be fined not more
than $1,000 or imprisoned for not more than six months, or both.
(b) Whoever, with intent to defraud, alters, forges, makes, or
counterfeits any stamp, coupon, ticket, book, or other device pre­
scribed by the Commissioner of Internal Revenue under section 807
for the collection or payment of any tax imposed by this title, or
uses, sells~ lends, or has in his possession any such altered, forgedf, or
counterfeited stamp), coupon, ticket, book, or other device, or ml-akes,
uses, sells, or has in his possession any material in imitstion of the'
[PuB. 271.1 22
material used in the manufacture of such stamp, coupon, ticket, book,
or other device, shall be fined not more than $5,000 or imprisoned not
more than five years, or both.
DEFINITONS

SEo. 811. When used in this title,­

('a) The term "wages" means all remuneration for employment,
incudig
as vaueof
he llremneatin aidinany medium
hatsuc tem sallnotincude that part
othe thn csh;excpt
of te rmunratin
wich aftr rmunratin eualto $3,000 has
bee pad t anindvidal
y n eploer ithresecttoemploy­
menduinganycalnda
yeris aidto uchindvidalby such
re~ct o eplo~nt urig suh clenar year.
emplyerwit
(bThe term 'employment' means any service, of whatever
nature, performed within the United States by an employee for
his emloyer, exKCePt­
e~~Agricultural labor;
()Domestic service in a private home;
(3) Casual labor not in te course of the employer's trade or
business;
(4) Service performed by an individual who has attained the
age of sixty-five;
(5) Service performed as an officer or member of the crew of a
vessel documented under the laws of the 'United States or of any
foreig country;
(6) Service performed in the employ of the United States
Government or of an instrumentality of the United States;
(7) Service performed in the employ of a State, a political
subdivision thereof, or an instrumentality of one or more States
or political subdivisions;
(8) Service performed in the employ of a corporation, com­
munmty chest, fund. or foundation, organized and operated
or eliiou, caritable, scientific, literary, or educa­
exclsivly
r fo th prvenionof cruelty to children or
tionl prpoes
aA o th ne earing ofwhich inures to the benefit
animlsno

TITLE IX-TAX ON EMPLOYERS OF EIGHT OR MORE

IMPOSITON OF TAX

S.EcTIoN 901. On and after January 1, 1936, every employer (as

defined in section 907) shall pay for each calendar year an excise
tax, with respect to having Individuals in his employ, equal to the
following percentages of the total wages (as defined in section 901)
payable by him (regardless of the time of payment) with respect to
employment (as defined in section 907) during suc calendar year:
(1) With respect to employment during the calendar year 1936
the rate shall be 1 per centumn
(2) With respect to emplo'yment during the calendar year 1937
the rate shall be 2 per centum;
(3) With respeqt to employment after December 81, 1937, the
rate shall be 3 per centum.
 23 [PuB. 271.1

CREDIT AGAINST TAX

SEc. 902. The taxpayer may credit against the tax imposed by
section 901 the amount of contributions with respect to employment
during the taxable year, paid by him Nbefore the date of filing his
return for the taxable year) into an unemployment fund und~er a
State law. The total credit allowed to a taxpayer under this section
for all contributions paid into unemployment funds with respect
to employment during. such taxable year shall not exceed 90 per
centumn of the tax, against which it is credited, and credit shall be
allowed only~for contributions made under the laws of States certified
for the taxaible year as provided in section 903.
CERTIFICATION OF STATE LAWS

SEC. 903. (a) The Social Security Board shall approve any State
law submitted to it, within thirty days of such submission, which it
finds provides that­
(1) All compensation is to be paid through public employment
offices in the State or such other agencies as the Board may
(2ocompensation shall be payable with respect to any day
of unemployment occurring within two years after the first day
of the first period with respect to which contributions are required;
(3) All money received in the unemployment fund shall
immediately upon such receipt be paid over to the Secretary of the
Treasury to the credit of the Unemployment Trust Fund
established by section 904;
(4) All money withdrawn from the Unemployment Trust Fund
by the State agency shall be used solely in the payment of
compensation, exclusive of expenses of administration­
(5) Compensation shall not be denied in such state to any
otherwise eligible individual for refusing to accept new work under
any of the following conditions: (A) If the postio offered is
vacant due directlyta strike, lockout, or other labor dispute*
(B) if the wages, hour or other conditions of the work offered
are subtnilyless riavorable to the individual than those
prevaiigfo iiar work in the locality; (C) if as a conditiou
of bein em ydthe individual would be required to join a
company union or to resign from or refrain from joining any
bona fide labor organization;
(6) All the' rihts, privileges, or immunities conferred by such
law orb csdne pursuant thereto shall exist subject to the
powe oftelgsature to amend or repeal such law at any time.
The Bor shluon approving such law, notify the Governor
of the Saeoitaproval.
(b) ODeebr31 in each taxable year the Board shall certify
to the Secretary of the Treasury each State whose law it has pe
viously approved, except that it shall not certify any State which,
after reasonable notice and opportunity for hearing to the State
agency, the Board finds has chianged its law so that it no longer
contains the provisions specified in subsection (a) or has with re­
spect to such taxable year failed to comply substantially with any
such provision.
[Pun. 271.1 24
(c) If, at any time during the taxable year, the Board has reason
to believe that a State whose law it has previously approved, may
not be certified under subsection (b), it shall promptly so notify the
Governor of such State.
UNEMPLOYMENT TRUST FUND

Smc. 904. (a) There is hereby established in the Treasury of the

United States a trust fund to be known as the "Unemployment
Trust Fund", hereinafter in this title called the "F1und". The
Secretary of the Treasury is authorized and directed to receive and
hold in the Fund all moneys deposited therein by a State agency
from a State unemployment fund. Such deposit may be made
directly with the Secretary of the Treasury or with any Federal
reserve bank or member bank of the Federal Reserve System desig­
nated by him for such purpose.
(b) It shall be the duty of the Secretary of the Treasury to
invest such portion of the Fund as is not, in his judgment, required
to meet current -withdrawals. Such investment may be made only
in interest bearing obligations of the United States or in obliga­
tions guaranteed as to both principal and interest by the United
States. For such purpose suech obligations may be acquired (1) on
original issue at par, or (2) by purehase of outstanding obligations
at the market price. The purposes for -which obligations of the
United States may be issued under the Second Liberty Bond Act,
as amended, are hereby extended to authorize the issuance at par
of special obligations exclusively to the Fund. Such special obliga­
tions shall bear interest at a rate equal to the average rate of in­
terest, computed as of the end of the calendar month next preceding
the date of such issue, borne by all interest-bearing obligations of
the United States then forming part of the public debt; except that
where such average rate is not a multiple of one-eighth of i per
centum, the rate of interest of such special obligations shall be the
mnultiple of one-eighth of 1 per centum next lower than such average
rate. Obligations other than such special obligations may be ac­
quired for the Fund only on such terms as to provide an invest­
ment yield not less than the yield which would be required in the
case of special obligations if issued to the Fund upon the date of
such acquisition.
(a) Any obligations acquired by the Fund (except special obligra­
tions issued exclusively to the Fund) may be sold at the marke
price, and such special obligations may be redeemed at par plus
accrued interest.
(d) The interest on- and the proceeds from the sale or redemption
of, any obligations held in the Fund shall be credited to and form
a part of the Fund.
(e) The Fund shall be invested as a single fund, but the Secretary
of the Treasury shall maintain a sej~arate book account for each
State agency and shall credit qatry on March 31, June 30, Sep
tember 30, and December 31, of each year, to each account, on the_
basis of the average daily balance of such account a proportionate
part of the earnings of the Fund for the quarter ending on such date.
(f) The Secretary of the Treasury is authorized and directed to
pay out of the Fund to any State agency such amount as it may duly
 25 [PuB. 271.1

requisition, not exceeding the amount standing to the account of such

State agency at the time of such payment.
ADMINISTRATION, REFUNDS, AND PENALTIES

SEO. 905. (a) The tax imposed by this title shall be collected by
the Bureau of Internal Revenue under the direction of the Secretary
of the Treasury and shall bep aid into the Treasury of the United
States as internal-revenue collections. If the tax is not paid when
due, there shall be added as part of the tax interest at the rate of
one-half of 1 per centum per month from the date the tax became
due until paid.
(b) Not later than January 81, next following the close of the
taxable year, each employer shall make a return of the tax under
this title for such taxable year. Each such return shall be made
under oath, shall be filed with the collector of internal revenue for
the district in which is located the principal place of business of the
employer, or, if he has no principal place of business in the United
States, then with the collector at Baltimore Maryl and, and shall con­
tain such information and be made in sucA manner as the Coimnis­
sioner of Internal Revenue with the approval of the Secretary of
the Treasury, may by regulations prescribe. All provisions of law
(including penalties) applicable in respect of the 7taxes imposed by
section 600 of the Revenue Act of 1926, shall, insofar as not incon­
sistent with this title, be applicable in respect of the tax imposed
by this title. The Commissioner may extend the time for filing the
return of the tax imposed by this title, under such rules and regula­
tions as he may prescribe with the approval of the Secretary of the
Treasury, but no Such extension shall be for more than sixty dlays.
th(c) Returns filed under this title shall be open to inspection in
the same manner, to the same extent, and subject to the same pro­
visions of law, including penalties, as returns made under Title II
of the Revenue Act of 1926.
(d) The taxpayer m~ay elect to pay the tax 'in four equal install­
ments instead of in a single payment in which case the first install­
ment shall be paid not later than the last day prescribed for the
filing of returns, the second installment shall be paid on or before the
last day of the third month, the third installment on or before the
last day of the sixth month, and the fourth installment on or before
the last day of the ninth month, after such last day. If the tax
or any installment thereof is not paid on or before the last day of
the period fixed for its payment, the whole amount of the tax unpaid
shall be paid upon notice and demand from the collector.
(e) At the request of the taxpayer the time for payment of the tax
or any installment thereof may be extended under regulations pre­
scribed by the Commissioner with the approval of the Secretary of
the Treasury, for a period not to exceed six months from the last day
of the period prescribed for the payment of the tax or any install­
ment thereof. The amount of the tax in respect of which any ex­
tension is granted shall be paid (with interest at the, rate of one-half
of 1 per centum per month) on or before the date of the expiration
of the period of the extension.
[Pu3. 271.] 26
(f) In the payment of any tax under this title a fractional part
of a cent shall be disregarded unless it amounts to one-half cent or
more, in which case it shall be increased to 1 cent.
INTERSTATE COMMERCE

SEC. 906. No person required under a State law to make payments

to an unemployment fund shall be relieved from compliance there­
with on the ground that he is engaged in interstate commerce, or
that the State law does not distinguish between employees engaged
in interstate commerce and those engaged in intrastate commerce.
DEFINITIONS

SEC. 907. When used in this title-­

(a) The term "employer" does not include any person unless
on each of some twenty days during the taxable year, each day
being in a different calendar week, the total number of individuals
who were in his employ for some portion of the day (whether or not
at the same moment of time) was eight or more.
(b) The term "wages"~means all remuneration for employment,
including the cash value of all remuneration paid in any medium
other than cash.
(c) The term "employment" means any service, of whatever
nature, performed within- the United States by an employee for his
employer, except­
( 1) Agricultural labor;
2)Domestic service in a private home;
3)Service performed as an officer or member of the crew of
a vessel on the navigable waters of the United States;
(4) Service performed by an individual in the employ of his
son, daughter, or spouse, and service performed by a child under
the age of twenty-one in the employ of his father or mother;
(5) Service performed in the employ of the United States
Government or of an instrumentality of the United States;
(6) Service performed in the employ of a State, a political
subdivision thereof, or an instrumentality of one or more States or
political subdivisions;
(7) Service performed in the employ of a corporation, com­
munity chest fund, or foundation oraie n prtdexclu­
sively for religious', charitable, sinicitrrdoreuational.
purposes, or for the prevention ofculyt e raials
no part of the net earnings of whc nrsttebnfto
fin private shareholder or individual.
Th5e term "State agency" means any State officer, board, or
other authority designated under a State law to administer the
unemployment lund in such State.
i(e) The term "unemployment fund" means a special fund,
established under a State law and administered by a tate agenoy,
for the payment of compensation.
(f) The term "contributions" means payments required by a
State law to be mnade by an employer into an unemployment fund,
to the extent that such payments are made by him without any par
thereof being deducted or deductible from the wages of individuals
in his employ.
 27 PUB. 271.~

(g) The term "compensation" means cash benefits payable to

individuals with respect to their unemployment.
RULES AND REGUJLATIONS

SEC. 908. The Commissioner of Internal Revenues, with the

approval of the Secretary of the Treasury shall make and publish
rules and regulations for the enforcement ol this title, except sections
903,~904, and 910.
ALLOWANCE OF ADDITIONAL CREDIT

SEC. 909. (a) In addition to the credit allowed under section V02,
a taxpayer may, subject to the conditions imposed by section 910,
credit against the tax imposed by section 901 for any taxable year
after the taxable year 1937, an amount with respect to each State
law, equal to the amount, if any, by which the contributions, with
respect to employment in such taxablee year, actually paid by the tax­
payer under such law before the date of filing his return for such
taxable year, is exceeded by whichever of the followinrg is the lesser­
(1) The amount of contributions which he would have been
required to pay under such law for such taxable year if he had
been subject to the highest rate applicable from time to time
throughout such year to any employer under such law; or
(2) Two and seven-tenths per centum of the wages payable
byv him with respect to employment with respect to which contribu­
tions for such year were required under such law.
(b) If the amount of the contributions actually so paid by the
taxpayer is less than the amount which he should have paid under the
State law, the additional credit under subsection (a) shall be reduced
proportionately.
(c) The total credits allowed to a taxpayer under this title shall
not exceed 90 per centum. of the tax against which such credits are
taken.
CONDITIONS OF ADDITIONAL CREDIT ALLOWANCE

SEC. 910. (a) A taxpayer shall be allowed the additional credit

under section 909, with respect to his contribution rate under a State
law being lower, for any taxable year, than that of another employer
subject to such law, only if the Board finds that under such law­
(1) Such lower rate, with respect to contributions to a pooled
fund, is permitted on the basis of not less than three years of
comensation experience;
()Such lower rate, with respect to contributions to a guaran­
teed employment account, is permitted only when his guaranty of
employmient was fulfilled in the preceding calendar year, and
such guaranteed employment account amounts to not less than
71/2 per centum of the total wages payable by him, in accordance
with such guaranty, with respect to employment in such State in
the prcdin clendar year;
()Suc lwer rate, with respect to contributions to a separate
reserve account, is permitted only -when (A) compensation has
been payable from such account throughout the preceding calendar
year, and (B) such account amounts to not less than five times
tPu&271L1 28
the largest amount of compensation paid from such account within
any one of the three preceding calendar years, and (C) such
account amounts to not less than T1½ per centum. of the total
wages payable by him (plus the total wages payable by any other
employers who may be contributing to sudi. account) with respect
to employment in such State in the preceding calendar year.
(b) Such additional credit shall be reduced, f aycontributions
under such law are made by such taxpayer at a lower rate under
conditions not fulfilling the requirements of subsection (a), by the
amount bearing the same ratio to such additional credit as the
amount of contributions made at such lower rate bears to the total
of his contributions paid for such year under such law.
(c) As used in this section­
(1) The term "reserve account " means a separate account in an
unemployment fund, with respect to an employer or. group of
employers, from which compensation is payable only wit1h respect
to the unemployment of individuals who were in the employ of
such employer, or of one of the employers comprising the group
(2) TIhe term "1pooled fund " means an unemployment fund or
any pa theref in which all contributions are mingled and undi­
videdand r'omo which compensation is paiable to al'l eligible indi­
vidals exeptthat to individuals last emp, oyed by employers with
resectto homreserve accounts are maintained by the State
agecyt i paable only when such accounts are exhausted.
(3)~heter "guaranteed employment account " means a sepa­
rate account, inan unemployment fund, of contribution-, paid by
an employer (or group of employers) who
(A) guarantees in advance thirty hours of wages for each of
forty calendar weeks (or more, with one weekly hur deducted
for each added week guaranteed) in twelve months to all the
individuals in his employ in one or more distinct esta'blishments,
except that any such individual's guaranty may commence after
a probationary period (included within twelve or less consecutive
calendar weeks), and
(B) gives security or assurance, satisfactory to the State
agency, for the fulfillment of such guaranties,
from which account compensation shall be payable with respect to
the unemployment of any such individual whiose guaranty is not
fulfilled or renewed and who is otherwise eligible for compensation
under the State law.
(4) The term "year of compensation experience "1, as applied to
an employer, means any calendar year throughout which compen­
sation was payable with respect to any individual in his employ
who became unemployed and was eligible for compensation.
TITLE X-GRANTS TO STATES FOR AID TO THE BLIND
APPROPRIATION

SECTioN 1001. For the purpose of enabling each State to furnish

financial assistance, as far as practicable under the conditions in
such State, to needy individuals who are blind there is hereby
authorized to be appropriated for the fiscal year enAing June 30, 1936,
 29 [PuB. 271.]

the sum of $3,000,000, and there is hereby authorized to be appropri­

ated for each fiscal year thereafter a sum sufficient to carry out the
purposes of this title. The sums made available under this section
shall be used for making payments to States which have submitted,
and had approved by the Social Security Board, State plans for aid
to the blind.
STATE PLANS FOR AID TO THE BLIND

SEC. 1002. (a) A State plan for aid to the blind must (1) provide
that it shall be in effect in all political subdivisions of the State, and,
if administered by them, be mandatory upon them; (2) provide for
financial participation by the State; (3) either provide for the
establishment of designation of at single State agency to administer
the plan, or provide or 'he establishment or designation of a single
State agency to supervise the administration of the plan; (4) pro­
vide for g-ranting to any individual, whose claim for aid is denied,
an oppotnt for a lir hearing before such State agency; (5)
provide such methods of administration (other than those relating
to selection, tenure of office, and compensation of personnel) as
are found by the. Board to be necessary for the efficient operation of
the plan; (6) provide that the St-ate agency will make such reports,
in such form and containing such information, as the Board may
from time to time require, and comply with such provisions as the
Board may from time to time find necessary to assure the correctness
and verification of such reports; and (1) provide that no aid will be,
furnished any individual under the plan with respect to any period
with respect to which he is receiving old-age assistance under the
State plan approved under section 2of this Act.
(b) The Board shall approve any plan which fulfills the condi­
tions specified in subsection (a), except that it shall not approve any
plan which imposes, as a condition of eligibility for aid to the blind
under the plan­
(1) Any residence requirement which excludes any resident of
the State who has resided therein five years during the nine years
inmmediately preceding the application for aid and has resided
therein continuously for one year immediately preceding the ap­
plication; or
(2) Any citizenship requirement which excludes any citizen of
the Unite d States.
PAYMENT TO STATES

SEC. 1003. (a) From the sums appropriated therefor, the Secretary
of the Treasury shall pay to each State which has an approved plan
for aid to the blind for each quarter, beg-inning with the quarter
commencing July 1, 1935, (1) an amount, which shall be used exclu­
sively as aid to the blind, equal to one-half of the total of the sums
expended during such quarter as aid to the blind under the State
plan with respect to each individual who is blind and is not an
inmate of a public institution, niot counting so much of such
expenditure with respect to any individual' for any mnonth as
exceeds $30, and (2) 6 per centum of such amount, which shall be
used for paying the costs of administering the State plan or for aid
to the blind, or both, and for no other purpose.
jPub. 271. 30
(b) The method of computing and paying such amounts shall be
as follows:
(1) The Board shall, prior to the beginning of each quarter,
estimate the amount to bep aid to the State for such quarter under
the poisions of clause (I) of subsection (a), such estimate to be
based ron (A) a report ifiied by the State contauimig its estimate of
the total sum to be expended in such quarter in accordance with the
provisions of such clause, and stating the amount app~ropriated or
made available by the State and its political subdivisions for such
expenditures in such quarter, and if such amount is less than one-
half of the total sum of such estimated expenditures, the source or
sources from which the difference is expected to be derived (B)
records showing the number of blind individuals in the §tate,
and (C) such other investigation as the Board may find necessary.
(2) The Board shall then certify to the Secretary of the Treas­
ury the amount so estimated by the Board, reduced or increased, as
the case imay be, by any sum by which it finds that its estimate
for any prior quarter was greater or less than the amount which
should have been paid to the State under clause (1) of subsection
(a) for such quarter, except to the extent that such sum has been
applied to make the amount certified for any prior quarter greater
or less than the amount estimated by the Board for such prior
quarter.
(3) The Secretary of the Treasury shall thereupon, through the
Division of Disbursement of the Treasury Department, and prior
to audit or settlement by the General Accounting Office, pay to the
State, at the time or times fixed by the Board, the amount so
certified, increased by 5per centum.
oPrmAToN op sTATz PLANs
Sr~c. 1004. In the case of any State plan for aid to the blind which
has been approved by the Board, if the Board, after reasonable notice
and opportunity for hearing to the State agency administering or
Supevsn h diitainof such plan, finds-­
(1) hatthepla ha ben so changed as to impose any residence
or itiensip equremntprohibited by section 1002 (b), or that
in he dmiistaton f te panany such prohibited requirement
is imposed, with the knowleg ofsuch State agency, in a substan­
tial number of cases; or
(2) that in the administration of the plan there is a failure
to comply substantially with any provision required by section 1002
(a) to be included in the plan;
the Board shall notify such State agency that further payments will
not be made to the State until the Board is satisfied that such pro­
hibited requirement is no longer so imposed, and that there is no
longer any such failure to comply. Until it is so satisfied it shall
make no further certification to the Secretary of the Treasury with
respect to such State.
ADMINISTRATION

SE-c. 1005. There is hereby authorized to be appropriated for the

fiscal year ending June 30, 1936, the sum of $30,000, for all necessary
expenses of the Board in administering the provisions of this title.
 31 [1PuB. 271.1

DEFINITION

SmO. 1006. *When used in this title the term "aid to the blind"
means money payments to blind individuals.
TITLE XI-GENERAL PROVISIONS
DEFINITIONS

SECTION 1101. (a) When used in this Act­

1) The term "State" (except when used in section 531)
(n
icludes Alaska, H-awaii, and the District of Columbia.
(2) The term "United States" when used in a geographical
sense means the States, Alaska, Hawaii, and the District of
Columbia.
(3) The term "person"~ means an individual, a trust or estate,
a partnership, or a corporation.
(4) The term "corporation" includes associations, joint-stock
companies, and insurance com anmes.
(5) The term "shareholder', includes a member in an associa­
tion, joint-stock company, or insurance company.
(6) The term "employee" includes an officer of a corporation.
(b) The terms "includes" and "including" when used in a defini­
tion contained in this Act shall not be deemed to exclude other things
otherwise within the meaning of the term defined.
(c) Whenever under this Act or any Act of Congress, or under
the law of any State, an employer is required or permitted to deduct
any amount from the remuneration of an employee and to pay the
amount deducted to the United States, a State, or any political
subdivision thereof, then for the purposes of this Act the amount
so deducted shall be considered to have been paid to the employee
at the time of such deduction.
(d) Nothing in this Act shall be construed as authorizing any
Federal official, agent, or representative, in carrying out any of the
provisions of this Act, to take charge of any child over the objection
of either of the parents of such chilld, or of the person standing in
low parentis to such child.
]RULES AND REGULATIONS

SEC. 1102. The Secretary of the Treasury, the Secretary of Labor,

and the Social Security Board, respectively, shall make 'and publish
such rules and regulations, not inconsistent with this Act. as may
be necessary to the efficient administration of the functions with
which each is charged under this Act.
SEPARABILITY

SEC. 1103. If any provision of this Act, or the application thereof

to any person or circumstance, is held invalid, the remainder of the
Act, and the application of such provision to other persons or
circumstances shall not be affected thereby.
WmUB271.1 32
]RESERVATION OF POWER

SEo. 1104. The right to alter, amend, or repeal any provision of

this Act is hereby reserved to the Congress.
SHORT TITLE

SEC.1105. This Act may be cited as the "Social Security Act."

Approved, August 14, 1935.
75TH CONGRESS1 SENATE fDOCUMENT

lat ,Session f No. 74

CONSTITUJTIONALITY 01? THE SOCIAL SECURITY ACT

OPINIONS
OF THE

SUPREME COURT OF THE UNITED STATES

TOGETHER WITH THE SEPARATE AND DISSENTING OPINIONS
IN THE CASES

INVOLVING THE CONSTITUTIONALITY OF

THE SOCIAL SECURITY ACT

CHAS. C. STEWARD MACHINE COMPANY, Petitioner

V.
HAR'wlrIi G. DAvis, INDivIDUALLY AND AS COLLWCTOB OF INTERNAL
REvENUE FOR THE DISTRICT OP ALABAMA, Respondent

Guy T. HELVERING, COMMISSIONER OF INTERNAL REVENUE, AND WILLIAM

M. WELCH, CoLLEcTOdR OP INTERNAL REvENuE POE THE DISTRICT OF
MASSACHUSETTS, Petition~rs
AND
TuE EDISON FAzECRIC ILLUMINATING COMPANY OP BOSTON
V.
GEORGE P. DAvis, Respondent

ALBERT A.. CARMICHAEL, INDIVIDUALLY AND As ATTORNEY GENERAL (M

THE STATE OP ALABAMA, ET AL., Appellants
V.

SOUTHERN COAL AND COKE COMPANY

ALBERT A. CARMICHAEL, INDIVIDUALLY AND As ATTORNEY GENERAL OP

THE STATE OP ALABAMA, Er AL., Appellants
V.
Gui~w STATES PAP'ER CORtPORATIN

PRESENTED BY MR. HAYDEN

MAY 26, 1037.-Ordered to be printed

UNITED STATES
GOVERN1IKNT PRINTING OFFICE
WASHINGTON: 1937
 CONTENTS

Chas. C. Steward Machinery Company, Petitioner v. Harwell G. Davis, Pg

Individually and as Collector of Internal Revenue for the District of
Alabama,nRespondent, opinion of the Court- -- ------------- - 1
Separate opinion of Mr. Justice McReynolds--------------------------- -- 15
Separate opinion of Mr. Justice Sutherland ------------------ - ---------- 21
Dissenting opinion---------------------------------------------------- 27
Gusy T. Helvering, Commissioner of Internal Revenue, and William M.
Welch, Collector of Interna~l Revenue for the District of MassachUsetts,
The Edison Electric Illuminating Company of Boston, Petitioners, v.
George P. Davis, Respondent, opinion of the Court--------------------- 29
Albert A. Carmichael,Individually and as Attorney General of the State of
Alabama, et al., Appellants, v. Southern Coal and Coke Company and Gulf
States Paper Corporation,opinion of the Court------------------------ 87
Dissenting opinion.-.--- --- -------------------------- 51
 SUPREME COURT OF THE UNITED STATES

No. 837.-OcroBERI Truzm, 1936.

Chas. C. Steward Machine Company,

Petitioner, On Writ of Certiorari to
vs. the United States Circuit
Harwell G. Davis, Individually and as Court of Appeals for the
Collector of Internal Revenue for the Fifth Circuit.
District of Alabama, Respondent.
[May 24, 1937.]

Mr. Justica C~iinozo delivered the opinion of the Court.

The validity of the tax imposed by the Social Security Act on
employers of eight or more is here to be determined.
Petitioner, an Alabama corporation, paid a tax in accordance with
the statute, filed a claim for refund with the Commissioner of In­
ternal Revenue, and sued to recover the payment ($46.14), asserting
a conflict between the statute and the Constitution of the United
States. Upon demurrer the District Court gave judgment for the
defendant dismissing the complaint, and the Circuit Court of Ap­
peals for the Fifth Circuit affirmed. - F. (2d) - The decision is
in accord with judgments of the Supreme Judicial Court of Massa­
chusetts (Howes Brothers CJo. v. Massachusetts Unemployment Corn-
pens ation Commission, December 30, 1936 5 N E. (2d) 720), the
Supreme Court of California (Gillum v. JoXsnon, November 25, 1936,
62 Pac. (2d) 1037), and the Supreme Court of Alabama (Beeland
'Wholesale Co. v. Kaulman, March 1T 1937, - Ala. -). It is in
conflict with a judgment of the Circuit dourt of Appeals for the First
Circuit, from which one judge dissented. Davis v. Boston & Maine
B. R. Co., April 14, 1937, - F. (2d) - . An important question of
constitutional law being involved, we granted certiorari.
The Social Security Act (Act of August 14, 1935, c. 531, 49 Stat.
-620, 42 U. S. C.? C. 7 (Supp.)) is divided into eleven separate titles,
of which only Titles IX and III are so related to this case as to stand
in need of summary.
The caption of Title IX is "Tax on Employers of Eight or More."
Ever~r employer (with stated exceptions) is to ]pay for each calendar
year Can excise tax, with respect to having individuals in his employ",
the tax to be measured by prescribed percentages of the total wages
payable by the employer during th aedrya ihrspect to
such employment. Section 901. On snt oeea eployer"
within thie meaning of the act unesh mly ih esns or
more. Section 907 (a). There ar loohrlmttosef minor
 CON'STITUTfIONALITY OF TEE SOMrL SECURITY A.01

importance. The term "employment" too has its special definition

excluding agricultural labor, domestic service in a private home Qn
some other smaller classes. Section 907 (c). The tax begins with the
year 1936, and is payable for ihe first time on January 31, 1937.
During the calendar year 1936 the rate is to be one per cent during
1937 two per cent, and three per cent thereafter. The proceeds, when
collected, go into the Treasury of the United States like internal-
revenue collections generally. Section 905 (a). They are not ear­
marked in any way. In certain circumstances, however; credits are
allowable. Section 902. If the taxpayer has made contributions to
an unemployment fund under a state law, he may credit such con­
tributions against the federal tax, provided, however, that the total
credit allowed to any taxpayer shall not exceed 90 per centum of the
tax against which it is credited, and provided also that the state law
shall have been certified to the Secretary of the Treasury by the
Social Security Board as satisfying certain minimum criteria. Sec­
tion 902. The provisions of Section 903 defining those criteria are
stated in the margin.' Some of the conditions thus attached to the
allowance of a credit are designed to give assurance that the state
unemployment compensation law shall be one in substance as well as
name. Others are designed to give assurance that the contributions
shall be protected against loss after payment to the state. To this last
end there are provisions that before a state law shall have the ap­
puroval of the Board it must direct that the contributions to the state
fud be paid over immediately to the Secretary of the Treasury to
the credit of the "Unemployment Trust Fund." Section 904 establish­
ing this fund is quoted below. 2 For the moment it is enough to say
' Sec. 903. (a) The Social Security Board shall approve any State law submitted to it.
within thirty daye of such submission which It finds provides that­
(1) All compensation is to be paiA through public employment offices in the State or
such other agencies as the Board may approve;
(2) No compensation shaUl be payable with respect to any day of unemployment occur­
ring within two years after the first day of the first period with respect to which con­
tributions are required;
(3) All money received In the unemployment fund shall Immediately upon such receipt
be paid over to the Secretary of the Treasury to the credit of the Unemployment Trust
Fund established by Section 904;
(4) All money withdrawn from the Unemployment Trust Fund by the State agency
shall he used solely in the payment of compensation, exclusive of expenses of
administration;
fo(5) Compensation shall not be denied In such State to any otherwise eligible individual
for refuin to accept new work under any of the following conditions: (A) If the posi­
ton ofrdis vacant due directly to a strike lockout, or other labor dispute; (B) if the
wages hours, or other conditions of the work offered are substantially less favorable to
the individual than those prevailing for similar work in the locality; (C) if as a condi­
tion of being employed the individual would be required to join a company union or to
reinfro m or refrain from joining any bona fide labor organization;
(Althe rights, privileges, or immunities conferred by such law or by acts done
pursuant thereto shall exist subject to the power of the legislature to amend or repeal
such law at any time.
The Board shall, upon approving such law, notify the Governor of the State of Its
approval.
(b) On December 81 In each taxable year the Board shall certify to the Secretary of
the Treasury each State whose law It has previously approved, except that It shall not
certify any State which, after reasonable notice and opportunity for hearing to the State
agency the Board finds has changed Its law so that it no longer contains the provisions
gspecified In subsection (a) or has with respect to such taxable year failed to comply
substantially with any such provision.
(c) If, at any time during the taxable year, the Board has reason to believe that a
State whose law it has previously approved, may not be certified under subsection (b), it
.hall promp~tly so notify the Governor of such State.
2 Sec. 904. a) There is hereby established in the Treasury of the United States a trust
fund to be known as the "Unemployment Trust Fund" herein2after In this title called the
"Fund". The Secretary of the Treasury is authorieA and ]directed to receive and hold
in the Fund all moneys deposited therein by a State agency from a State unemployment
fund. Such deposit may be made directly with the Secretary of the Treasury or with hany
Federal reserve bank or member bank oflthe Federal Reserve System designated by hm
for such purpose.
(b) it shall be the duty of the Secretary of the Treasury to Invest such portion of the
Fund as is not, in his judgment, roouired to meet current withdrawals. Such Investment
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 3

that the Fund is to be held by the Secretary of the Treasury who is

to invest in government securities any portion not required in his
judgment to meet current withdrawals. He is authorized and directed
to pay out of the Fund to any competent state agency such sums as it
ma uly requisition from the amount standing to its credit. Section
904.(f).
Title III, which is also challenged as invalid, has the caption
"Grants to States for Unemployment Compensation Administra­
tion." Under this title, certain sums of money are "authorized to
be appropriated" for the purpose of assisting the states in the
administration of their unemployment compensation laws, the maxm
imum. for the fiscal year ending June 30, 1936 to be $4,000,000, and
$49,000,000 for each fiscal year thereafter. Section 301. No pres­
ent appropriation is made to the extent of a single dollar. All that
the title de is to authorize future appropriations. Actually only
$2,250,000 of the $4,000,000 authorzedwas appropriated for 1936
(Act of Feb. 11, 1936, c. 49, 49 Stat. 1109 1113) and only
$29,000,000 of the $49,000,000 authorized* for tue following year.
Act of June 22, 1936, c. 689, 49 Stat. 1597, 1605. The aproprria­
tions when made were not specifically out of the proced o the
employment tax, but out of any moneys in the Treasury. Other
sections of the title prescribe the method by which the payments are
to be made- to the state (Section 302) and also certain conditions to
be established to the satisfaction of the Social Security Board be­
fore certifying the propriety of a payment to the Secretary of the
Treasury. Section 303. They are designed to give assurance to
the Federal Government that the moneys granted by it will not be
expended for purposes alien to the grant, and will be used in the
administration of genuine unemployment compensation laws.
The assault on the statute proceeds on an extended front. Its
assailants take the ground that the tax is not an excise; that it
is not uniform throughout the United States as excises are req~uired
to be; that its exceptions are so many and arbitrary as to violate
the Fifth Amendment; that its purpose was not revenue, but an
unlawful invasion of the reserved powers of the states; and that
the states in submitting to it have yielded to coercion and have
may be made only In Interest-bearing obligations of the United States or In obligations
guaranteed as to both principal and Interest by the United States. For such purpose
such obligations may be acquired (1) on original issue at parfo,orh(2) by purtchase of out­
standin obligations at the market price. The purposes frwhc obiain of the
United States may be issued under the Second Liberty Bond Act, as amended, are herby
extended to authorize the issuance at par of special obligations exclusively to the Fuend.
Such special obligations shall bear Interest at a rate equal to the average rate of interest.
computed as of the end of the calendar month next preceding the date of such tissue, borne
by all Interest-bearing obligations of the United States then forming part of the public
debt; except tht where such average rate is not a multiple of one-eighth of 1 per centum.
the ratio of Interest of such special obligations shall be the multiple of one-eighth of 1
per centum. next lower than such average rate. Obligations other than such special
obligations may be acquired for the Fund only on such terms as to provide an investment
yield not less than the yield which would be required in the case of special obligations if
~sed to the Fund upon the date of such acquisition.
(cAny obligations acquired by the Fund (except special obligations Issued exclusively
to the Fund) may be sold at the market price, and such special obligations may be
rdeed at par plus accrued interest.
(d) The Interest on, and the proceeds from the sale or redemption of, any obligations
hedIn the Fund shall be credited to and form a part of the Fund.
(e The Fund shall be invested as a single fund, but the Secretary of the Treasury
shall maintain a separate book account for each State agency and shall credit quarterly on
March 34iJune 30, September 30, and December 3i, of each year, to each account, on the
basis of tieaverage daily balance of such account, a proportionate part of the earnings of
the Fund for the quarter ending on such date.
(f) The Secretary of the Treasury Is authorized and directed to pay out of the Fond to
any State agency such amount as it may duly requisition, not exceeding the amount
standing to the account of such State agency at the Ulme of such payment.
4 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

abandoned governmental functions which they are not permitted

to surrender.
The objections will be considered seriatim. with such further ex­
planation as may be necessary to make their meaning clear.
First: The tax, which is described in the statute as an excise, is
laid with uniformity throughout the United States as a duty, an
impost or an excise upon the relation of employment.
1. We are told that the relation of employment is one so essential
to the pursuit of happiness that it may not be burdened with a tax.
Appeal is made to history. From the precedents of colonial days
we are supplied with illustrations of excises common in the col­
onies. They are said to have been bound up with the enjoyment of
particular commodities. Appeal is also made to principle or the
analysis of concepts. An excise, we are told, imports a tax upon
a privilege- employment, it is said, is a right, not a privilege, from
whichv it lolows that employment is not subject to an excise.
Neither the one appeal nor the other leads to the desired goal.
As to the argument from history: Doubtless there were many
excises in colonial days and later that were associated, more or less
intimately, with the enjoyment or the use of property. This would
not prove, even if no others were then known, that the forms then
accepted were not subject to enlargement. Cf. Pensacola Tele­
phon (Jo. v. 'Western Union Telegraph Co., 96 U. S. 1, 9; In re
Debs, 158 U. S. 564, 591; South Carolinav. United State8, 199 U. S.
437, 448, 449. But in truth other excises were known, and known
since early times. Thus in 1695 (6 & 7 Win. III, c. 6), Parliament
passed an act which granted " to His Majesty certain Rates and
Duties upon Marriage, Births and Burials", all for the purpose of
"Ccarrying on the War against France with Vigour." See Opinion
of the Jutice8, 196 Mass. 602, 609. No commrodity was affected there.
The industry of counsel has supplied us with an apter illustration
'where the tax was not different in substance from the one now
challenged as invalid. In 1777, before our Constitutional Conven­
tion, Parliament laid upon employers an annual "duty" of 21 shil­
lings for "every male Servant" empo d in stated forms of work.8
Revenue Act of 1777, 17 Georg II .3.'Tepin smd
as a distinction that a tax upon the use of male servants was thought
of as a tax upon a luxury. Davis v. Boston & Maine, B. R. Co.,
supra. It did not touch employments in husbandry or business.
This is to throw over the argument that historically an excise is
a tax upon the enjoyment of commodities. But the attempted dis­
tinction, whatever may be thought of its validity, is inapplicable to
a, statute of Virginia passed in 1780. There a tax of three pounds,
six shillings an d eight pence was to be paid for every male tithable
above the age of twventy-one years (with stated exceptions), and a
*like tax for "every white servant whatsoever, except apprentices
MSThe list of services Is comprehensive. It Included : "Maitre d'Hotel, House-steward,
Master of the Horse, Groom of the Chamber, Valet de Chambre, Butler, Under-butler,
Clerk of the Kitchen, Confectioner, Cook, House-porter F'ootman, Running-footman,
roo
Coacman Posillon, tabe-boy, and the respective Helpers in the Stables
r Pstilio, o intheCapacity of Gardener (not being a Day-
suc Coc~iandrom,
'Thestatte
mendd fom tme t tie, bt wth its basic structure unaffected, Is on
oda.
thestauteboo~s At o 183. 3 GOrge I6II c 16 Act of 1812. 52 George Ill.
153 16&
c. o 3;Ac 7 ic.,c.90 Acto 1869 2& 3!i Vict., c. 14. 24 Halsbury's
1t ed,
Lawsof Eglan, pp 692et8eq.
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT~

under the age of twenty one years." 10 Hening's Statutes of Vir­

ginia, p. 244. Our colonial forbears knew more a out ways of taxing
than some of their descendants seem to be willing to concede.'
The historical prop failing, the prop or fancied pro p of. princi'_
ple remains. We learn that employment for lawful gain is a
"4natural" or "inherent" or "inalienable" right, and not a "priv­
ilege" at all. But natural rights, so called, are as much subject to
taxation as rights of less importance.,, An excise is not limited to
vocations or activities that may be prohibited altogether. It is not
limited to those that are the outcome of a franchise. It extends to
vocations or activities pursued as of common right. What the in­
dividual does in the operation of a business is amenable to taxation
just as much as what he owns, at all events if the classification is not
tyrannical or arbitrary. "Business is as legitimate an object of the
taxing powers as property." City of Newton v. Atchison, 31 Kan.
151, 154 (per Brewer, J.). Indeed, ownership itself, as we had oc­
casion to point out the other day, is only a bundle of rights and
privileges invested with a single name. Henneford v. Silas Mason
Co., Inc., March 29, 1937, - U. S. -. "A state is at liberty, if it
p olase,
tx hemal coletively or to separate the faggots and
a th dstriutivly.
chage Ib. Employment is a business re­
latonif
ot tslf buines.It is a relation without which busi­
nesscoud
sldo becariedon effectively. The power to tax the
activities and relations that constitute a calling considered as a unit
is the power to tax any of them. The whole includes the parts.
Nashville C. c&St. L. Ry. Co. v. Wallace, 288 U. S. 249, 267, 268.
The subject matter of taxation open to the power of the Congress
is as comprehensive as that open to the power of the states though the
method of apportionment may at times be different. "Tue Congress
shall have power to lay and collect taxes, duties, imposts and excises"
Art. 1, § 8. If the tax is'a direct one, it shall be apportioned accordin
to the census or enumeration. If it is a duty, impost or excise,7ithl
be uniform throughout the United States. Togelher, these classes
include every form of tax appropriate to sovereignty. Cf. Burnet,v.
Brooks, 288 U. S. 378, 403, 405; Brutsluberv. Union Pacific R. R. Co.,
240 U. S. 1, 12. Whether the tax is to be classified as an "excise"~is in
truth not of critical importance. If not that, it is an "impost" (Pollock
v. Farmers'Loan and Trust Co., 158 U. S. 601, 622, 625; Pacific Insur­
anwe Co. v. Soule, 7 Wall. 433,445), or a "duty" (Veazie Bank v. Fenno,
8 Wall. 533, 546, 547; Pollock v. Farmers' Loan and Trust Co., 1'57
U. S. 429, 570; Knowlton v. Moore, 178 U. S. 41, 46). A capitation or
other "direct" tax it certainly is not. "Although there have been from
time to time intimations that there might be some tax which was not a
direct tax nor included under the words 'duties, imposts and excises,'
such a tax for more than one hundred years of national existence has
as yet remained undiscovered, notwithstanding the stress of particular
See also the following laws imposing occupation taxes: 12 Hening's statutes of
virginia, p. 285 Act of 1786; Chandler, The Colonial Records of Georgia, vol. 19, Part 2,
P.88, Act of Rt78; 1 Potter, Taylor and Yancey, North Carolina Revised Laws, p. 601.
Act of 1784.
*The cases are brought together by Professor John MacArthur Maguire In an essay,
"ITaxingthe Exercise of Natural Rights" (Harvard Legal Essays, 1934, Pap.273, 322).
Thasachusetts decisions must be read in the light of the particu ar definitions and
restrictions of the Massachusetts Constitution. Opinions of the Justices, 282 Mass. 619,
622; 266 Mass. 590, 593. And see Howes Brothers Co. v. Massachusetts Unemployment
Compensation Commission, supra. pp. 780, 731.
S. Doc. 74, 75-.1---2
6 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

circumstances has invited thorough investigation into sources of

powers."1 Pollock v. Farmers'Loan and Trust Co., 157 U. S. 429, 557.
T~here is no departure from that thought in later cases, but rather a
new emphasis of it. Thus, in Thomas v. United State8, 192 U. S. 363,
370, it was said of the words "duties, imposts and excises" that "they
were used comprehensively to cover customs and excise duties imposed
on importation, consumption, manufacture and sale of certain comn­
modities, privileges, particular business transactions, vocations, occu­
pations and the like.' At times taxpayers have contended that the
Congress is without power to lay an excise on the enjoyment of a Tii
lege created by state law. The contention has been putasdas ase­
less. Congress may tax the transmission of property by inheritance
or will, though the states and not Congress have created the privilege
of succession. Knowlton v. Moore, supra, p. 58. Congress may tax
the enjoyment of a corporate franchise, though a state and not Con­
gress has brought the franchise into being. Flint v. Stone Tracy Co.,
220 U. S. 108, 155. The statute books of the states are strewn with
illustrations of taxes laid on occupations pursued of common right.,,
We hind no basis for a holding that the power in that regard which
belongs by accepted practice to the legislatures of the states, has been
denied by the Constitution to the Congress of the nation.
2. The tax being an excise, its imposition must conform to the
canion of uniformity. There has been no departure from this re­
quirement. According to the settled doctrine the uniformity ex­
acted is geographical, not intrinsic. Knowlton v. Moore, supra, p.
83; Flint v. Stone Tracy Co supra p. 158; Billings v. United
States, 232 U. S. 261, 282; Ste lagenv. Clum, 245 U. S. 605, 613;
LaBelle Iron Works V. United States, 256. U. S. 377, 392; Poe v.
Seaborn, 282 U. S. 101, 117; 'Wright v. Vinton Branch Mountain
Trust Bank, March 29, 1937, - U. S. -. "The rule of liability
shall be the same in all parts of the United States." Florida v.
Mellon, 273 U. S5.12, 17.
Second: The excise is not invalid under the provisions of the
Fifth Amendment by force of its exemptions.
The statute does not apply, as we have seen, to employers of less
than eight. It does not apply to agricultural labor, or domestic
service mn a private home or to some other classes of less importance.
Petitioner contends that the effect of these restrictions is an arbi­
trary discrimination vitiating the tax.
The Fifth Amendment uiilike the Fourteenth has no equal pro­
tection clause. LaBelle Iron Works v. United States, 8upra; Bru­
slhaber v. Union Pacific R. R. CO., supra, p. 24. But even the
states, though subject to such a, clause, are not confined to a formula
of rigid uniformity in framing measures of taxation. Swiss Oil
Corp. v. Shanks, 273 U. S. 407, 413. They may tax some kinds of
'Alabama General Acts, 1935, c. 1941 Art. XIII (flat license tax on occupations) ;Arizona
Revised Code, Supplement (1936) 3: 38a et seq. (general gross receipts tax) ;Connecticut
General Statutes, Supplement (195) §§ 457c, 458c (rsreipstax on unincorporated
businesses); Revised Code of Delaware (1935) i§2ip7 (fa1ies txocna
tin)Compiled Laws of Florida, Permanent Supplement (1936) Vol. I, 5 1279 (flat
lcnetax on occupations); Georgia Laws, 1935, p. ii (flat license tax on occupations);
Indiana Statutes Ann. (1933) § 64-2601 et 8eq. (general gross receipts tax) ; Louisiana
Law,
EtraSesion
3d 194, ctNo. 15, 1st Exra Session, 1935, Acts Nos. 5, 6 (gen­
eraeceptstax
grss ~ssssipiLaws,
. 1934, c. 119 (general gross receipts tax) ; New
Mexco aws . i (gnerl gossrece~ts tax); South Dakota Laws, 1933, e. 184
195,
(geera gossreeips
axexire Jne 3 , 1935) Washington Laws, 1935 e. 180
Tite I (enealros rceitstax ;West Virginia Code, Supplement (1939) 1 96d
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 7
property at one rate, and others at another, and exempt others alto­
gther. Bell's Gap R. R. Co. v. Pennsylvania, 134 U. S. 232; Steb-
EMins v. Riley, 268 U. S. 137, 142; Ohio Oil Co. v. Conway, 281 U. S.
146, 150. They may lay an excise on the operations of a particular
kind of business, and exempt some other kind of business closely akin
thereto. Quong Wing v. Kirkendall, 223 U. S. 59, 62; American
Sugar Relining Co. v. Louisiana, 179 U. S. 89, 94; Armour Packing
Co. v. Lacy, 200 U. S. 226, 235; Brown-Forman Co. v. Kentucky, 217
U. S. 563, 573; Heisler v. Thomas Colliery Co., 260 U. S. 245, 255;
State Board of Taxo Comm'r8 v. Jackson, 283 U. S. 527, 537, 538.
If this latitude of judgment is lawful for the states, it is lawful,
a fortiori, in legislation by the Congress, which is subject to re­
straints less narrow and confining. Quong Wing v. Kirkendall,
heclassifications and exemptions directed by the statute now
in controversy have support in considerations of policy and prac­
tical convenience that cannot be condemned as arbitrary. The clas­
sifications and exemptions would therefore be upheld if they had
been adopted by a state and the provisions of the Fourteenth
Amendment were invoked to annul them. This is held in two cases
passed upon today in which precisely the same provisions were the
subject of attack, the provisions being containedi in the Unemploy­
ment Comnpensation Law of the State of Alabama. Carmichael v.
Southern Coal c& Coke Co., No. 724, - U. S. -, and Carmichael
v. Gulf States Paper Corp., No. 797, - U. S. -. The opin­
ion rendered in those cases covers the ground fully. It would be
useless to repeat the argument. The act of Congress i.; therefore
valid, so far at least as its system of exemptions is conunrned, and
this though we assume that discrimination, if gro%, enoug~h, is
equivalent to confiscation and subject under the Fifth Amnenament
to challenge and annulment.
Third: The excise is not void as involving the coercion of the
States in contravention of the Tenth Amendment or of restrictions
implicit in our federal form of government.
The proceeds of the excise when collected are paid into the Treas­
ur at Washington, and thereafter are subject to appropriation like
public moneys generally. Cincinnati Soap Co. v. United States,
Mnay 3, 1937, - U. S. -. No -presumption can be indulged that they
will be misapplied or wasted." Even if they were collected in the
hope or expectation that some other and collateral good would be
furthered as an incident that without more would not make the act
invalid. Sonzinsky v. l!Jnited States, March 29, 1937, - U. S. -.

This indeed is hardly questioned. The case for the petitioner is

built on the contention that here an ulterior aim is wrought into the
very structure of the act and what is even more important that the
atim is not only ulterior2 but essentially unlawful. In particular, the
9O0per cent credit is relied upon as supporting that conclusion. But
beoethe statute succumbs to an assault upon these lines, two prop­
ositions must be made out by the assailant. Cincinnati Soap CoV..
aThe total estimated receipts without taking Into account the 90 per cent deduction,
iange from $225,000 000 In the first year to over $900.000,000 seven years later. Even
tf maximum credits are available to taxpayers in all states, the maximum estimated
if
receipts from Title IX wiUl range between $22 000,000, at one extreme, to $90,000,000 at
the other. If some of the states hold out in their unwvillingness to pas* vtatutes of their
own, the receipts will be still larger.
8 CONSTITUTIONALITY OF THlE SOCIAL SECURITY ACT

United States, supra. There must be a showing. in the first place

that separated from the credit the revenue provisions are incapable
of standing by themselves. There must be a showing in the second
place that the tax and. the credit in combination are weapons of
coercion, destroying or impairing the autonomy of the states. The
truth of each proposition being essential to the success of the assault,
we pass for convenience to a consideration of the second, without
pausing to inquire whether there has been a demonstration of the
To draw the line intelligently between duress and inducement
there is need to remind ourselves of facts as to the problem of un­
employment that are now matters of common knowledge. 'West
Coast Hotel Co. v. Parrish,March 29, 1937.- U. S. -. The
relevant statistics are gathered in the brief of counsel for the Gov­
ernment. Of the many available figures a few only will be men­
tioned. During the years 1929 to 1936, when the country was pass­
ing through a cyclical depression, the number of the unemployed
mounted to unprecedented heights. Often the average was more
than 10 million; at times a peak was attained of 16 million or
more. Disaster to the breadwinner meant disaster to dependents.
Accordingly the roll of the unemployed, itself formidable enough,
was only a partial roll of the destitute or needy. The fact de­
veloped quickly that the states were unable to give the requisite
relief. The problem had become national in area and dimensions.
There was need of help from the nation if the people were not to
starve. It is too late today for the argument to be heard with
tolerance that in a crisis so extreme the use of the moneys of the
nation to relieve the unemployed and their dependents is a use for
any purpose narrower than the promotion of the -general welfare.
Cf. United States v. Butler, 297 U. S. 1, 65, 66, Helvering v.
Davis, decided herewith. The nation responded to the call of
the distressed. Between January 1, 1933 and July 1, 1936 the
states (according to statistics submitted by the Goverlnments in­
curred obligations of $689,291,802 for emergency relief; local sub­
divisions an additional $775,675,366. In the same period the ob­
ligations for emergency relief incurred by the national govern­
ment were $2,929,307,125, or twice the obligations of states and
local agencies combined. According to the President's budget
message for the fiscal year 1938, the national government expen ed
for public works and unemployment relief for the three fiscal years
1934, 1935, and 1936, the stupendous total of $8,681,000,000. The
parens patriae has many reasons-fiscal and economic as well as
social and moral-for planning to mitigate disasters that bring
these burdens in their train.
In the presence of this urgent need for some remedial expedient,
the question is to be answered whether the expedient adopted has
overlept the bounds of power. The assailants of the statute say
that its dominant end and aim is to drive the state legislatures
under the whip of economic pressure into the enactment of unem­
ployment compensation laws at the bidding. of the central govern­
ment. Supporters of the statute say that its operation is not con­
straint, but the creation of a larger freedom, the states and the
nation joining in a coiiperative endeavor to avert a common evil.
Before Congress acted, unemployment compensation insurance was
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 9
still, for the most part, a project and no more. Wisconsin was the
pioneer. Her statute was adopted in 1931. At times bills for such
insurance were introduced elsewhere, but they did not reach the
stage of law. In 1935, four states (California, Massachusetts, New
Hampshire and New York) passed unemployment laws on the eve
of the adoption of the Social Security Act, and two others did like­
wise after the federal act and later in the year. The statutes dif­
fered to some extent in type, but were directed to a common end.
In 1936, twenity-eight other states fell in line, and eight more the
present year. But if states had been holding back before the
passage of the federal law, inaction was not owing, for the most
part to the lack of sympathetic interest. Many held back through
alarm lest in laying such a toll upon their industries, they would
place themselves in a position of economic disadvantage as com­
pared with neighbors or competitors. See House Report, No. 615,
74hCngress, 1st sessionp 8; Senate Report, No. 628, 74th Con­
gress, 1st session, p. 11.11 Two consequences ensued. One was that
the freedom of a state to contribute its fair share to the solution
of a national problem was paralyzed by fear. The other was that
in so far as there was failure by the states to contribute relief
according to the measure of their capacity, a disproportionate bur­
den, and a mountainous one, was laid upon the resources of the
Government of the nation.
The Social Security Act is an attempt to find a method by which
all these public agencies may work together to a common end. Every
dollar of the new taxes will continue in all likelihood to be used and
needed by the nation as long as states are unwilling, whether through
timidity or for other motives, to do what can be done at home. At
least the inference is permissible that Congress so believed, though
retaining undiminished freedom to spend the money as it pleased. On
the other hand fulfillment of the home duty will be lightened and en­
couraged by crediting the taxpayer upon his account with the Treas­
ury of-the nation to the extent that his contributions under the laws of
the locality have simplified or diminished the problem of relief and
the probable demand upon the resources of the fisc. Duplicated taxes,
or burdens that approach them, are recognized hardships that govern­
ment, state or national, may properly avoid. Henneford v. Silas
Mason Co., Inc., supra;Kidd v. Alabama, 188 U. S. 730, '132; Watson
v. State Comptroller, 254 U. S. 122, 125. If Congress believed that
the general welfare would better be promoted by relief through local
units than by the system then in vogue, the cooperating localities
ought not in all fairness to pay a second time.
Who then is coerced through the operation of this statute? Not
the taxpayer. He pays in fulfilment of the mandate of the local
legislature. Not the state. Even now she does not offer a suggestion
that in passing the unemployment law she was affected by duress.
The attitude of Massachusetts is significant iHer act became a law August 12, 1935,
two days before the federal act. Even so, she prescribed that its provisions should not
become operative unless the federal bill became a law or unless eleven of the following
stats (labmaconectcut Deawae, coriaIllinois, Indiana, Iowa Maine Maryland,
Michgan MinestaMissuri Ne HapshreNew Jersey, New York, North Carolina,
Ohi, Rodeislnd
ouh CrolnaTenesseVermont) should Impose on their em­
ploersburenssu~tanialy -quialet. ctsof 1935, c. 479, p. 655. Her fear of
cometiio
isths frceuly ateted. Se also California Laws 1935, e- 352, Art. I,
1 2 Idho
aws 196 (hir Exra Session) e. 12, § 26; MissPIsspi Laws, 1936, c.
10 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

SeeW (armichael V. &outlernCoal d&Coke CJO., 8UPra; Carmichaelv.

Gulf States PaperCorp., 8upra. For all that appears she is satisfied
with her choice and would be sorely disappointed if it were now to
be annulled. The difficulty with the petitioner's contention is that it
confuses motive with coercion. "Every tax is in some measure regu­
latory.. To some extent it interposes an economic impediment to the
activity taxed as compared with others not taxed." Sonzinslcy v.
Unidted States, supra. In like manner every rebate from a tax when
conditioned upon conduct is in some measure a temptation. But to
hold that motive or temptation is equivalent to coercion is to plunge
the law in endless difficulties. The outcome of such a doctrine is the
acceptance of a philosophical determinism by which choice becomes
impossible. Till now th~e law has been guided by a robust common
sense which assumes the freedom of the will as a working hypothesis
in the solution of its problems. The wisdom of the hypothesis has
illustration in this case. Nothing in the case suggests the exertion of
a power akin to undue influence, if we assume that such a concept
can ever be applied with fitness to the relations between state and
nation. Even on that assumption the location of -the point at which
pressure turns into compulsion, and ceases to be inducement, would be
a question of degree,-at times, perhaps, of fact. The point had not
been reached when Alabama made her choice. We cannot say that
she was. acting, not of her unfettered will, but under the strain of a
persuasion equivalent to undue influence, when she chose to have relief
administered under laws of her own making by agents of her own
selection, instead of under federal laws, administered by federal
officers, with all the ensuinga evils, at least to many minds, of federal
patronage and power. There would be a strange irony, indeed, if
her choice were now to be annulled on the basis of an assumed duress
in the enactment of a statute which her courts have accepted as a true
expression of her will. Beeland 'Wholesale Co. v. Kaufman, 8UPra.
We think the choice must stand.
In ruling as we do, we leave many questions open. We do not say
that a tax is valid, when imposed by act of Congress if it is laid upon
the condition that a state may escape its operation through the adop­
tion of a statute unrelated in subject matter to activities ~airly within
the scope of national policy and power. No such question is before
us. In the tender of this credit Congress does'not intrude upon fields
foreign to its function. The purpose of its intervention, as we have
shown, is to safeguard its own treasury and as an incident to that
potection to place the states upon a footing of equal opportunity.
Brains upon its own resources are to be checked; obstructions to the
freedom of the states are to be leveled. It is one thing to impose a
tax dependent upon the conduct of the taxpayers, or of the state in
which they live, where the conduct to be stimulated or discouraged is
unrelated to the fiscal need subserved by the tax in its normal opera­
tion, or to any other end legitimately national. The Child Labor Taa
Case, 259 U. S. 20, and Hill v. 'Wallace 259 U. S. 44, were decided in
the belief that the statutes there condemned were exposed to that
reproach. Cf. United States v. Constantie 29U.S 287 It s ite
another thing to say that a tax will be abtduonteding of an
act that will satisfy the fiscal need, the tax and the alternative being
approximate equivalents. In such circumstances, if in no others, in­
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT ji

ducement or persuasion does not go beyond the bounds of power. We

do not fix the outermost line. Enough for present purposes that
wherever the line may be, this statute is within it. Definition more
precise must abide the wisdom of the future.
Florida v. Mellon, 273 U. S. 12, supplies us with a precedent, if
precedent be needed. What was in controversy there was section 301
of the Revenue Act of 1926, which imposes a tax upon the transfer
of a decedent's estate, while at the same time permitting a credit, not
exceeding 80 per cent, for "the amount of any estate, inheritance,
legacy or succession taxes actually paid to any State or Territory".
Florida challenged that provision as unlawful. Florida had no in­
heritance taxes and alleged that under its constitution it could not levy
any. 273 U. S. 12, 15. Indeed, by abolishing inheritance taxes, it
had hoped to induce wealthy persons to become its citizens. See 67
Cong. Rec:, Part 1, pp. 735,752. It argued at our bar that "the Estate
Tax provision was not passed for te purpose of raising federal
revenue" (273 U. S. 12, 14), but rather "to coerce States into adopting
estate or inheritance tax laws." 273 U. S. 12, 13. In fact, as a result
of the 80 per cent credit, material changes of such laws were made in
36 states."0 In the face of that attack we upheld the act as valid.
Cf. Ma&9achusett8 V.Mellon, 262 U. S. 447, 482; also Act of August 5,
1861, c. 45, 12 Stat. 292; Act of May 13, 1862, c. 66, 12 Stat. 384.
United State8 v. Butler,7 supra, is cited by petitioner as a decision
to the contrary. There a tax was imposed on processors of farm prod­
ucts, the proceeds to be paid to farmers who would reduce their acreage
and crops under agreements with the Secretary of Agriculture, the
plan of the act being to increase the prices of certain farm products by
decreasing the quantities produced. The court held (1) that the
so-called tax was not a true one (pp. 56, 61), the proceeds being ear­
marked for the benefit of farmers complying with the prescribed
conditions, (2) that there was an attempt to regulate production
without the consent of the state in which production was afrected, and
3) that the payments to farmers were coupled with coercive contracts
~p. 73), unlawful in their aim and oppressive in their consequences.
The decision was by a divided court, a minority taking the view that
the objections were untenable. None of them is applicable to the
situation here developed.
(a) The proceeds of the tax in controversy are not earmarked for
a special group.
(b) The unemployment compensation law which is a condition of
the credit has had the approval of the state and could not be a law
without it.
(c) The condition is not linked to an irrevocable agreement, for
the state at its pleasure may repeal its unemployment law (Section
903 (a) (6) ), terminate the credit, an~d place itself where it was before
the credit was accepted.
e(d) The condition is not directed to the attainment of an unlawful
en, but to an end, the relief of unemployment, for which nation and
state may lawfully cooperate.
Fourth: The statute does not call for a surrender by the states of
powers essential to their quasi-sovereign existence.
'"Perkins, State action under the Federal Estate Tax Credit Clause, 13 North Carolina
L. Rev. 271, 280.
12 UONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

Argument to the contrary has its source in two sections of the act.
One section (903 11) defines the minimum criteria to which a state
compensation System is required to conform if it is to be accepted by
the Board as the basis for a credit. The other section (904 12 ) rounds
out the requirement with complementary rights and duties. Not all
the criteria or their incidents are challenged as unlawful. We will
speak of them first generally, and then more specifically in so far as
they are questioned.
A credit to taxpayers for payments made to a State under a state
unemployment law will be manifestly futile in the absence of some
assurance that the law leading to the credit is in truth what it pro­
fesses to be. An unemployment law framed in such a way that the
unemployed who look to it will be deprived of reasonable protection
is one in name and nothing more. -What is basic and essential may
be assured by suitable conditions. The terms embodied in these sec­
tions are directed to that end. A wide range of judgment is given
to the several states as to the particular type o'f statute to be spread
upon their books. For anything to the contrary in the provisions of
this act they may use the pooled unemployment form, which is in
effect with variations in Alabama, California, Michigan, New York,
and elsewhere. They may establish a system of merit rating appli­
cable at once or to go into effect later on the basis of subsequent
experience. Cf. Sections 909, 910. They may provide for employee
contributions as in Alabama and California , or put the entire burden
upon the employer as in New York.- They may choose a system of
unemployment reserve accounts by which an employer is permitted
after his reserve has accumulated to contribute at a reduced rate or
even not at all. This is the system which had its oriin in Wisconsin.
What they may not do, if they would earn the creditI is to depart
from those standards which in the judgment of Congress are to be
ranked as fundamental. Even if opinion may differ as to the funda­
mental quality of one or more of the conditions, the difference will
not avail to vitiate the statute. In determining essentials Congress
must have the benefit of a fair margin of discretion. One cannot say
with reason that this margin has been exceeded, or that the basic
standards have been determined in any arbitrary fashion. In the
event that some particular condition shall be found to be too uncertain
to be capable of enforcement, it may be severed from the others, and
what is left will still be valid.
We are to keep in mind steadily that the conditions to be approved
by the Board as the basis for a credit are not provisions of a contract,
but terms of a statute, which may be altered or repealed. Section 903
(a) (6). The state does not bind itself to keep the law in force. It
does not even bind itself that the moneys paid into the federal fund
will be kept there indefinitely or for any stated time. On the con­
trary, the Secretary of the Treasury will honor a -requisition for the
whole or any part of the deposit in the fund whenever one is made
by the appropriate officials. The only consequence of the repeal or
excessive amendment of the statute, or the expenditure of the money,
when requisitioned, for other than compensation uses or administra­
tive e~xpenses, is that approval of the law will end, and with it the
"See note i, 8upra.
"See note 2, 8upra.
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 13
allowance of a credit upon notice to the state agency and an oppor­
tunity for hearing. §ection 903 (b) (c).
These basic considerations are in truth a solvent of the problem.
Subjected to their test, the several objections on the score of abdica­
tion are found to be unreal.
Thus, the argument is made that by force of an agreement the
moneys when withdrawn must be "paid through public employment
offices in the State or through such other agencies as the Board may
approve." Pection 903 (a) (1). But in truth there is no agreement
as to the me 'iod of disbursement. There is only a condition which
the state is free at pleasure to disregard or to fulfil]. Moreover, ap­
proval is not requisite if public employment offices are made the dis­
bursing instruments. Approval is to be a check upon resort to "other
agencies" that may, perchance, be irresponsible. A state looking for
a credit must give assurance that her -systemhas been organized upon
a base of rationality.
There is argument again that the moneys when withdrawn are to
be devoted to specific uses, the relief of unemployment, and that by
agreement for such payment the quiasi-svereign position of the
state has been impaired, if not abandned. But aga~in there is con­
fusion between promise and condition. Alabama is still free, with­
out breach of an agreement, to change her system over night. No
officer or agency of the national Government can force a compensa­
tion law upon 'her or kee p it in existence. No officer or agency of
that Government, either by suit or other means, can supervise or
control the application of the payements.
Finally and chiefly, abdication is supposed to follow from section
904 of the statute and the parts of section 903 that are comple­
mentary thereto. Section 903 (a). (3). By these the Secretary of
the Treasury is authorized and drected to receive and hold in the
Unemployment Trust Fund all moneys deposited therein by a state
agency for astate unemployment fund and to invest in obligations of
the United States such portion of the Fund as is not in his judgment
required to meet current withdrawals. We are told that Alabama
in consenting to that deposit has renounced the plenitude of power
inherent in her statehood.
The same pervasive misconception is in evidence again. All that
the state has done is to syin effect through the enactment of a
statute that her agents salbe authorized to deposit the unemploy­
men tax receipts in the Treasury at Washington. Alabama Unem­
ployment Act of September 14, 1935 section 10 (i). The statute
may be repealed. S~ect ion 903 (a) (6). The consent may be re­
voked. The deposits may be withdrawn. The moment the state
commission gives notice to the depositary that it would like the
moneys back, the Treasurer will return them. To find state destruc­
tion there is to find it almost anywhere. With nearly as much reason
one might say that a state abdicates its functions -when it places the
state moneys on deposit in a national bank.
There are very good reasons of fiscal and governmental policy
why a State should be willing to make the Secretary of the Treasury
the custodian of the fund. His possession of the moneys and his
control of investments will be an assurance of stability and safety in
times of stress and strain. A report of the Ways and Means Commit­
tee of the House of Representatives, quoted in the margin, develops,
14 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT]

the situation clearly.` 5 Nor is there risk of loss or waste. The credit
of the Treasury is at all times back of the deposit, with the result that
the right of withdrawal will. be unaffected by the fate of any inter­
mediate investments, just as if a checking account in the usual form
had been opened in a bank.
The inference of abdication thus dissolves in thinnest air when
the deposit is conceived of as dependent upon a statutory consent,
and not upon a contract effective to create a duty. By this we do
not intimate that the conclusion would be different if a contract
were discovered. Even sovereigns maiy contract without derogating
from their sovereignty. Perry v. United States, 294 U. S. 330 353;
1 Oppenheim, International Law, 4th ed., §§ 493, 494; HOal, in­
ternational Law, 8th ed., § 107; 2 Hyde, International Law, § 489.
The states are at liberty, upon obtaining the consent of Congress,
to make agreements with one another. Constitution, Art. I, section
10, par. 3. Poole v. Fleeger, 11 Pet. 185, 209; Rhode Island v.
Massachusetts, 12 Pet. 657, 725. We find no room for doubt that
they may do the like with Congress if the essence of their state­
hood is maintained without impairment."4 Alabama is seeking and
obtaining a credit of many millions in favor of her citizens out of
the Treasury of the nation. Nowhere in our scheme of govern­
ment-in the limitations express or implied of our federal consti­
tution--do we find that she is prohibited from assenting to condi­
tions that will assure a fair and just requital for benefits received.
But we will not labor the point further. An unreal prohibition
directed to an unreal agreement will not vitiate an act of Congress,
and cause it to collapse in,ruin.
Fifth: Title III of the act is separable from Title IX, and its
validity is not at issue.
The essential provisions of that title have been stated in the
opinion. As already pointed out, the title does not appropriate a
dollar of the public moneys. It does no more than authorize ap­
propriations to be made in the future for the purpose of assisting
states in the administration of their laws, if Congress shall decide
that approprnations are desirable. The title might be expunged,
and TilIX would stand intact. Without a severability clause we
should still be led to that conclusion. The presence of such a clause
(Section 1103) makes the conclusion even clearer. Williams v.
Standard Oil Co., 278 U. S. 235, 242; Utah Power d&Light Co. v.
Pfost, 286 U. S. 165, 184; Carter v. Carter Coal Co., 298 U. S.
238, 312.
The judgment is Afr~med.
" "This last provision will not only afford maximum safety for these funds but Is very
essential to insure that they will operate to promote the stability of business rather than
the reverse. Unemployment reserve funds have the peculiarity that the demands upon
them fluctuate considerabl , being heaviest when business slackens. If, in such times, the
securities in which these funds are invested are thrown upon the market for liquidation
the net effect Is likely to be increased deflation. Such a resiult is- avoided In this bill
through the provision that all reserve funds are to he held by the United States Treasury
to be Invested and liquidated by the Secretary of the Treasury in aL manner calculated
to promote business stability. When business conditions are such that Investment In
securities purchased on the open market is unwise, the Secretary of the Treasury may
Issue special nonnegotiable obligations exclusively to the unemployment trust fund. When
Et reverse situation exists and heavy drains are made upon the fund for payment of unem­
ployment benefits, the Treasury doss not have to dispose of the securities belonging to
the fund In open market but may asme them Itself. With such a method of handling
the reserve funds, It is beliee that this bill will solve the problem often raised i
discussions of unemployment compensation, regarding the possibility of transferring pur­
chasing power from boom periods to depression periods. It will In fact operate to sus­
tain purchasing power at the onset of a depression without having any counteracting
deflationary tendencies." House Report, No. 615, 74th Congress, lst session. p. 9.
2"Cf 12 Stat. 503 ; 26 Stat. 417.
 SUPREME COURT OF THE UNITED STATES

No. 837.-OCToBERt TmM-, 1936.

Chas. C. Steward Machine Company, On Writ of Certiorari to

Petitioner, the United States Circuit
'V8. Cuto pel o h
Harwell G. Davis Individually and CutoAppel o h
as Collector of internal Revenue. FithCru.
[May 24, 1937.]
Separate opinion of Mr. Justice McREYwoLDs.
That portion of the Social Security legislation here under consid­
eration, I think, exceeds the power granted to Congress. It unduly
interferes with the orderly government of the State by her own
people and otherwise offends the Federal Constitution.
In Texas v. White, 7 Wall. 700 725 (1869), a cause of momentous
importance, this Court, through dhief J ustice Chase, declared- ­
But the perpetuity and indissolubility of the Union, by no means implies the
loss of distinct and individual existence, or of the right of self-government by
the States. Under the Articles of Confederation each State retained its sover­
eignty, freedom, and independence, and every power, jurisdiction, and right not
expressly delegated to the United States. Under the Constitution, though the
powers of the States were much restricted, still, all powers not delegated to
the United States, nor prohibited to the States, are reserved to the States re­
spectively, or to the people. And we have already had occasion to remark at
this term, that "the people of each State compose a State, having its own
government, and endowed with all the functions essential to separate and
independent existence," and that "without the States in union, there could be
no such political body as the United States." [Lane County v. Oregon, 7 Wall.
71, 76.] Not only, therefore, can there be no loss of separate and independent
autonomy to the States, through their union under the Constitution, but it
may be not unreasonably said that the preservation of the States, and the
maintenance of their governments, are as much within the design and care of
the Constitution as the preservation of the Union and the maintenance of the
National government. The Constitution, in all Its provisions, looks to an
indestructible Union, composed of Indestructible States.
The doctrine thus announced and often repeated, I had supposed
was firmly established. Apparently the States remained really free
to exercise goverunmental powers, not delegated or prohibited, with­
out interference, by the Federal Government through threats of
punitive measures or offers of seductive favors. Unfortunately, the
decision just announced opens the way for practical annihilation of
this theoryi and no cloud of words or ostentatious parade of irrele­
vant statistics should be permitted to obscure that fact.
The invalidity also the destructive tendency of legislation like
the Act before us were forcefully pointed out by President Frank­
15
16 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

lin Pierce in a veto message sent to the Senate May 3, 1854.1 He

was a scholarly lawyer of distinction and enjoyed the advice and
counsel of a rarely able Attorney General-Caleb Gushing of Massa­
chusetts. This message considers with unusual lucidity points here
specially important. I venture to set out pertinent portions of it
which must appeal to all who continue to respect both the letter and
spirit of our great charter.
To the Senate of the United States:
The bill entitled "An Act making a grant of public lands to the several
States for the benefit of indigent insane persons," which was presented to
me on the 27th ultimo, has been maturely considered, and Is returned to
the Senate, the House in which it originated, with a statement of the objec­
tions which have required me to withhold from it my approval.

If in presenting my objections to this bill I should say more than strictly

belongs to the measure or is required for the discharge of my official obliga­
tion, let it be attributed to a sincere desire to justify my act before those
whose good opinion I so highly value and to that earnestness which springs
from my deliberate conviction that a strict adherence to the terms and pur­
poses of the federal compact offers the best, if not the only, security for the
preservation of our blessed inheritance of representative liberty.
The bill provides In substance:
First. That 10,000,000 acres of land be granted to the several States, to
be apportioned among them In the compound ratio of the geographical area
and representation of said States in the House of Representatives.
Second. That wherever there are public lands in a State subject to sale
at the regular price of private entry, the proportion of said 10,000,000 acres
falling to such State shall -be selected from such lands within It, and that to
the States In which there are no such public lands land scrip shall be Issued
to the amount of their distributive shares, respectively, said scrip not to be
entered by said States, but to be sold by them and subject to entry by their
a~ssigaees: Provided, That none of it shall be sold at less than $1 per acre,
under penalty of forfeiture of the same to the United States.
Third. That the expenses of the management and superintendence of said
lands and of the moneys received therefrom shall be paid by the States to
which they may belong out of the treasury of said States.
Fourth. That the gross proceeds of the sales of such lands or land scrip
so granted shall be invested by the several States in safe stocks, to constitute
a perpetual fund, the principal of which shall remain forever undiminished,
and the Interest to be appropriated to the maintenance of the indigent insane
within the several States.
Fifth. That annual returns of lands or scrip sold shall be made by the
States to the Secretary of the Interior, and the whole grant be subject to cer­
tain conditions and limitations prescribed In the bill, to be assented to by
legislative acts of said States.
This bill therefore proposes that the Federal Government shall make provi­
sion to the amount of the value of 10,000,000 acres of land for an eleemosynary
object within the several States, to he administered by the political authority
of the same; and It presents at the threshold the question whether any such
act on the part of the Federal Government is warranted and sanctioned by
the Constitution, the provisions and principles of which are to be protected
and sustained as a first and paramount duty.
It can not be questioned that if Congress has power to make provision for the
Indigent Insane without the limits of this District it has the same power to
provide for the Indigent who are not insane, and thus to transfer to the Federal
Government the charge of all the poor In all the States.It has the same power
to provide hospitals and other local establishments for the care and cure of
every species of human infirmity, and thus to assume all that duty of either
public philanthropy. or public necessity to the dependent, the orphan, the sick,
or the needy which Is now discharged by the States themselves or by corporate
Institutions or private endowments existing under the legislation of the States.
I"Messages and Papers of the President" by James D. Richardson, Vol. V, pp. 247-256.
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 17
The whole field of public beneficence Is thrown open to the care and culture of
the Federal Government. Generous impulses no longer encounter the limita­
tions and control of our imperious fundamental law; for however worthy may
be the present object in itself, it is only one of a class. It is not exclusively
worthy of benevolent regard. Whatever considerations dictate sympathy for
this particular object apply in like manner, if not in the same degree, to idiocy,
to physical disease, to extreme destitution. If Congress may and ought to
provide for any one of these objects, It may and ought to provide for them
all. And if it be done in this case, what answer shall be given when Congress
shall be called upon, as it doubtless will be, to pursue a similar course of legis­
lation in the others? It will obviously be vain to reply that the object is worthy,
but that the application has taken a wrong direction. The power will have
been deliberately assumed, the general obligation will by this act have been
acknowledged, and the question of means and expediency will alone be left for
consideration. The decision upon the principle In any one case determines it
for the whole class. The question presented, therefore, clearly is upon the
constitutionality and propriety of the Federal Government assuming to enter
into a novel and vast field of legislation, namely, that of providing for the care
and support of all those among the people of the United States who by any
form of calamity become fit objects of public philanthropy.
I readily and, I trust, feelingly acknowledge the duty incumbent on us all
as men and citizens, and as among the highest and holiest of our duties,
to provide for those who, in the mysterious order of Providence, are subject
to want and to disease of body or mind; but I can not find any authority in
the Constitution for making the Federal Government the great almoner of public
charity throughout the United States. To do so would, in my judgment, be
contrary to the letter and the spirit of the Constitution and subversive of the
whole theory upon which the Union of these States is founded. And if it were
admissible to contemplate the exercise of thin power for any object whatever,
I can not avoid the belief that it would in the end be prejudicial rather than
beneficial in the noble offices of charity to have the charge of them transferred
from the States to the Federal Government. Are we not too prone to forget
that the Federal Union is the creature of the States, not they of the Federal
Union? We were the inhabitants of colonies distinct in local government one
from the other before the Revolution. By the Revolution the colonies each
became an independent State. They achieved that independence and secured
its recognition by the agency of a consulting body, which, from being an as­
sembly of the ministers, of distinct sovereignties instructed to agree to no
form of government which did not leave the domestic concerns of each State
to itself, was appropriately denominated a Congress. When, having tried the
experiment of the Confederation, they resolved to change that for the present
Federal Union, and thus to confer on the Federal Government more ample
authority, they scrupulously measured such of the functions of their cherished
sovereignty as they chose to delegate to the General Government. With this
aim and to this end the fathers of the Republic framed the Constitution, in
and by which the independent and sovereign States united themselves for
certain specified objects and purposes, and for those only, leaving all powers
not therein set forth as conferred on one or another of the three great depart-
ments--the legislative, the executive, and the judicial-indubitably with the
States. And when the people of the several States had in their State conven­
tions, and thus alone, given effect and force to the Constitution, not content
that any doubt should in future arise as to the scope and character of this
act, they ingrafted thereon the explicit declaration that "the powers not dele­
gated to the United States by the Constitution nor prohibited by It to the
States are reserved to the States respectively or to the people."
Can It be controverted that the great mass of the business of Government­
that involved in the social relations, the internal arrangements of the body
politic, the mental and moral culture of men, the development of local resources
of wealth, the punishment of crimes in general, the preservation of order, tte
relief of the needy or otherwise unfortunate members of society--did in practice
remain with the States; that none of these objects of local concern are by the
Constitution expressly or impliedly prohibited to the States, and that none of
them are by any express language of the Constitution transferred to the United
States? Can It be claimed that any of these functions of local administration
and legislation are vested in the Federal Government by any implication? I
have never found anything In the Constitution which is susceptible of such a
construction. No one of the enumerated powers touches the subject or has even
18 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

a remote analogy to It. The powers conferred upon the United States have
reference to federal relations, or to the means of accomplishing or executing
things of federal relation. So also of the same character are the powers taken
away from the States by enumeration. In either case the powers granted and
the powers restricted were so granted or so restricted only where it was requisite
for the maintenance of peace and harmony between the States or for the purpose
of protecting their common interests and defending their common sovereignty
against aggression from abroad or insurrection at home.
I shall not discuss at length the question of power sometimes claimed for the
General Government under the clause of the eighth section of the Constitution,
which gives Congress the power "to lay and collect taxes, duties, imposts, and
excises, to pay debts and provide for the common defense and general welfare
of the United States," because if it has not already been settled upon sound
reason and authority It never will be. I take the received and just constructioa
of that article, as if written to lay and collect taxes, duties, imposts, and excises
in ord~er to pay the debts and in order to provide for the common defense and
general welfare. It is not a substantive general power to provide for the welfare
of the United States, but is a limitation on the grant of power to raise money by
taxes, duties, and imposts. If it were otherwise, all the rest of the Constitution,
consisting of carefully enumerated and cautiously guarded grants of specific
powers, would have been useless, if not delusive. It would be impossible in that
view to escape from the conclusion that these were Inserted only to mislead for
the present, and, instead of enlightening and defining the pathway of the future,
to involve Its action in the mazes of doubtful construction. Such a conclusion
the character of the men who framed that sacred instrument will never permit us
to form. Indeed, to suppose it susceptible of any other construction would be to
consign all the rights of the States and of the people of the States to the mere
discretion of Congress, and thus to clothe the Federal Government with authority
to control the sovereign States, by which they would have been dwarfed into
provinces or departments and all sovereignty vested in an absolute consolidated
central power, against which the spirit of liberty has so often and in so many
countries struggled In vain.
in my judgment you can not by tributes to humanity make any adequate
compensation for the wrong you would Inflict by removing the sources of
power and political action from those who are to be thereby affected. If the
time shall ever arrive when, for an object appealing, however strongly, to our
sympathies, the dignity of the States shall bow to the dictation of Congress by
conforming their legislation thereto, when the power and majesty and honor
of those who created shall become subordinate to the thing of their creation,
I but feebly utter my apprehensions when I express my firm conviction that we
shall see "the beginning of the end."
Fortunately, we are not left In doubt as to the purpose of the Constitution
any more than as to its express language, for although the history of its for­
mation, as recorded in the Madison Papers, shows that the Federal Government
in its present form emerged from the conflict of opposing influences which have
continued to divide statesmen from that day to this, yet the rule of clearly
defined powers and of strict construction presided over the actual conclusion
and subsequent adoption of the Constitution. President Madison, in the Fed­
eralist, says:
"The powers delegated to the proposed Constitution are few and defined.
Those which are to remain In tbe State governments are numerous and In­
definite. . . . Its [the General Government's] jurisdiction extends to certain
enumerated objects only, and leaves to the several States a residuary and In­
violable sovereignty over all other objects."
In the same spirit President Jefferson Invokes "the support of the State gov­
ernments in all their rights as the most competent administrations for our domes­
tic concerns and the surest bulwarks against anti-republican tendencies ;" and
President Jackson said that our true strength and wisdom are not promoted by
invasions of the rights and powers of the several States, but that, on the con­
trary, they consist "not In binding the States more closely to the center, but in
leaving each more unobstructed in its proper orbit."
The framers of the Constitution, In refusing to confer on the Federal Govern­
ment any jurisdiction over these purely local objects, In my judgment manifested
a wise forecast and broad comprehension of the true interests of these objects
themselves. It is clear that public charities within the States can be efficiently
administered only by their authority. The bill before me concedes this, for it
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 19
does not commit the funds it provides to the administration of any other
authority.
I can not but repeat what I have before expressed, that If the several States,
many of which have already laid the foundation of munificent establishments of
local beneficence, and nearly all of which are proceeding to establish them, shall
be led to suppose, as, should this bill become a law, they will be, that Congress
Is to make provision for such objects, the fountains of charity wlll be dried up
at home, and the several States, instead of bestowing their own means on the
social wants of their own people, may themselves, through the strong temptation
which appeals to states as to individuals, become humble suppliants for the
bounty of the Federal Government, reversing their true relations to this Union.

I have been unable to discover any distinction on constitutional grounds

or grounds of expediency between an appropriation of $10,000,000 directly
from the money in the Treasury for the object contemplated and the appro­
priation of lands presented for my sanction, and yet I can not doubt that
if the bil proposed $10,000,000 from the Treasury of the United States for
the support of the indigent insane In the several States that the constitutional
question involved In the act would have attracted forcibly the attention of
Congress.
I respectfully submit that In a constitutional point of view it is wholly
Immaterial whether the appropriation be In money or in land.
To assume that the public lands are applicable to ordinary State objects,
whether of public structures, police, charity, or expenses of State administra­
tion, would be to disregard to the amount of the value of the public lands all
the limitations of the Constitution and confound to that extent all distinctions
between the rights and powers of the States and those of the United States;
for if the public lands may he applied to the support of the poor, whether sane
or insane, if the disposal of them and their proceeds be not subject to the
ordinary limitations of the Constitution, then Congress possesses unqualified
power to provide for expenditures in the States by means of the public lands,
even to the degree of defraying the salaries of governors, judges, and all
other expenses of the government and internal administration within the
several States.
The conclusion from the general survey of the whole subject Is to my mind
Irresistible, and closes the question both of right and of expediency so far as
regards the principle of the appropriation proposed in this bill. Would not the
admission of such power in Congress to dispose of the public domain work the
practical abrogation of some of the most important provisions of the Constitu­
tion?
The general result at which I have arrived is the necessary consequence of
those views of the relative rights, powers, and duties of the States and of the
Federal Government which I have long entertained and often expressed and
in reference to which my convictions do but increase in force with time and
experience.
No defense is offered for the legislation under review up~on the
basis of emergency. The hypothesis is that hereafter it will con­
tinuously benefit unemployed members of a class. Forever, So far
as we can see, the States are expected to function under federal
direction concerning an internal matter.. By the sanction of this
adventure, the door is open for progressive inauguration of others
of like kind under which it can hardly be expected that the States
will retain genuine independence of action. And without inde­
pendent States a Federal Union as contemplated by the Constitu­
tion becomes impossible.
At the bar counsel asserted that under the present Act the tax
upon residents of Alabama during the first year will total $9,000,000.
All would remain in the Federal Treasury but for the adoption by
the State of meaaures agreeable to the National Board. If con­
20 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

tinued, these will bring relief from the payment of $8,000,000 to the
United States.
Ordinarily I must think, a denial that the challenged action of
Congress and what has been done under it amount to coercion and
impair freedom of government by the people of the State would
be regarded as contrary to practical experience. Unquestionably
our federate plan of government confronts an enlarged peril.
 SUPREME COURT OF THE UNITED STATES
No. 837.-OUToBER TERM, 1937.

Chas. C. Steward Machine Company, On Writ of Certiorari to

Petitioner, the United States Cir-
Hawl .D vis, Icuit Court of Appeals
HarellG.DavsIndividually and as for the Fifth Circuit.
Collector of Internal Revenue.
[May 24, 1937.]

Separate opinion of Mr. Justice SUTHERLAND.

With most of what is said in the opinion just handed down, I

concur. I agree that the payroll tax levied is an excise within the
power of Congress; that the devotion of not more than 90%o of it
to the credit o~f employers in states which require the payment of a
similar tax under so-called unemployment-tax laws is not an uncon­
stitutional use of the proceeds of the federal tax; that the po
vision making the adoption by the state of an unemployment law
of a specifie d character a condition precedent to the credit of the
tax does not render the law invalid. I agree that the states are not
coerced by the federal legislation into adczpting unemployment
legilation. The provisions of the federal law may operate to induce
the sa topass an employment law if it regards such action to be
in its interest. But that is not coercion. If the act stopped here, I
should accept the conclusion of the court that the legislation is not
unconstitutional.
But the question with which I have difficulty is whether the ad­
miinistrative provisions of the act invade the governmental adminis­
trative powers of the several states reserved by the Tenth Amend­
ment. A state may enter into contracts; but a state cannot, by
contract or statute, surrender the execution, or a share in the execu­
ion, of any of its gvernamental powers either to a sister State or
to the federal government, any more than the federal government
can surrender the control of any of its governmental powers to a

govrnmental incharacter.
the highestdegree, ihu t h tt

igthe proceeds. xpnd

21
S. Doe. 74. 75-l---­
22 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

The people of the United States, by their Constitution, have af­

firmed a division of internal governmental powers between the fed­
eral government and the governments of the several states-com­
mitting to the first its powers by express grant and necessary im­
plication; to the latter, or to the people, by reservation, "the powers
not delegated to the United States by the Constitution, nor prohibited
by it to the States". The Constitution thus affirms the complete
supremacy and independence of the state within the field of its
powers. Carter v. Carter Coal Co., 298 U. S. 238, 295. The fed­
eral government has no more authority to invade that field than
the state has to invade the exclusive field of national governmental
powers; for, in the oft-repeated words of this court in Tewas v.
White, 7 Wall. 70,75 h rsrainof the State and the
maintenance of thi oenet r smuch within t ie design
and care of the Cosiuina h rsrainof the Union and
the maintenance ofteNtoa oenet"The necessity of
preserving each from every form of illegitimate intrusion or inter­
ference on the part of the other is so imperative as to require this
court, when its judicial power is properly invoked, to view with a
careful and discriminating eye any legislation challenged as consti­
tuting such an intrusion or interference. See South Carolina v.
United States, 199 U. S. 437, 448.
The precise question, therefore,. which we are required to answer
by an application of these principles is whether the congressional
act contemplates a surrender by the state to the federal govern­
me~nt, in whole or in part, of any state governmental power to ad­
minister its own unemployment law or the state payroll-tax funds
which it has collected for the purposes of that law. An affirmative
answer to this question, I think, must be made.
I do not, of course, doubt the power of the state to select and
utilize a depository for the safekeeping of its funds; but it is quite
another thing to agree with the selected depository that the funds
shall be witharawn for certain stipulated purposes, and for no other.
Nor do I doubt the authority of the federal government and a state
government to cooperate to a common end, provided each of them
is authorized to reach it. But such cooperation must be effectuated
by an exercise of the powers which they severally possess, and not
by an exercise, through invasion or surrender, by one of them of the
governmental power of the other.
An illustration of what I regard as permissible cooperation is
to be found in Title I of the act now under consideration. By that
title, federal appropriations for old-age assistance are authorized
to be made to any state which shall have adopted a plan for old-age
assistance conforming to designated requirements. But the state is
not obliged, as a condition of having the federal bounty, to deposit
in the federal treasury funds raisedf by the state. The state keeps
its own funds and administers its own law in respect of them, without
let or hindrance ofaykn ntepr fthe federal government;
so that we have smlthfaiarcsoffederal aid upon condi­
tions which the stewihusurnrngayof its powers may
accept or not as itcossRascuet .Mlon, 262 U. 9. 447,
480, 482-483.
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 23
But this is not the situation with which we are called upon to
deal in the present case. For here, the state must deposit the pro­
ceeds of its taxation in the federal treasury, upon terms which
make the deposit suspiciouslyr like a forced loan to be repaid only
in accordance with restrictions imposed by federal law. Title
IX, §§ 903 (a) (3), 904 (a), (b), (e). All moneys withdrawn from
this fund must be used exclusively for the payment of compensa­
tion. § 903 (a) (4). And this compensation is to be paid through
public employment offices in the state or such other agencies as a
federal board may approve. § 903 (a) (1). The act, it is true,
recognizes [§ 903 (a) (6)] the power of the legislature to amend
or repeal its compensation law at any time. But there is nothing
in the act as I read it, which justifies the conclusion that the state
may, in that event, unconditionally withdraw its funds from the
federal treasury. Section 903 (b) provides that the board shall
certify in each taxable year to the Scretary of the Treasury each
state whose law has been approved. But the board is forbidden to
certify any state which the board finds has so changed its law that
it no longer contains the provisions specified in subsection '(a), "or
has with respect to such taxable year failed to comply substantially
with any such provision." The federal government, therefore, in the
person of its agent, the board, sits not only as a perpetual overseer,
interpreter and censor of state legislation on the subject, but, as
lord paramount to determine whether the state is faithfully exe­
cuting its own law-as though the state Tere a dependency under
pupilfage'1 and not to be trusted. The foregoing, taken 'in connec­
tion with the provisions that money withdrawn can be used only in
payment of compensation and that it must be paid through an
agency approved by the federal board, leaves it, to say the least,
highly uncertain whether the right of the state to withdraw any
part of its own funds exists, under the act, otherwise than upon
these various statutory conditions. It is true also that subsection
(f) of § 904 authorizes the Secretary of the Treasury to pay tQ an~y
state agency "such amount as it may duly requisition, not exceed­
igthe amount standing to the account of such State agency at the
tIme of such payment." But it is to be observed that the payment
is to be made to the state agency, and only such amount as that
agency may duly requisition. It is hard to find in this provision
any extension of the right of the state to withdraw its funds except
in the manner and for the specific purpose prescribed by the act.
By these various provisions of the act, the federal agencies are
authorized to supervise and hamper the administrative powers of
the state to a degree which not only does not comport with the
dignity of a quasi-sovereigyn state-a matter with which we are
not judicially concernd-ut which den~y to it that supremacy
and freedom from external interference in respect of its affairs
which the Constitution contemplates-a matter of very definite
judicial concern. I refer to some, though by no means all, of the
cases in point.
In the License Cams8, 5 How. 504, 588, Mr. Justice McLean said
that the federal government was supreme within the scope of its
'CmpreSnow v. United States, 18 Wall. 317. 319-320.
24 CONSTITUTIONALITY OF TME SOCIAL SECURITY ACT
delegated powers, and the state governments eculyspeei
the exercise of the powers not delegated nor inihibited to them; that
the states exercise their powers over everyhig connected with their
social and internal condition; and that over these subjects the fed­
eral government had no power. "They appertain to the State
sovereignty as exclusively as powers exclusively delegated apper­
tain to the general government."
In Tarbie's Case, 13 Wall. 397, Mr. Justice Field, after point­
ing out that the general government and the state are separate and
distinct sovereignties, acting separately and independently of each
other within their 'respective spheres, said that, except in one
particular, they stood in the same independent relation to each
other as they would if their authority embraced distinct terri­
tories. The one particular referred to is that of the supremacy of
the authority of the United States in case of conflict between
the two.
In Farringtonv. Tennessee, 95 U. S. 679, 685, this court said:
'Yet every State has a sphere of action where the authority of the nationai
government may not Intrude. Within that domain the State Is as if the
union were not. Such are the checks and balances in our complicated but wise
system of State and national polity.
"The powers exclusively given to the federal government" it
was said in Vorcester v. State of Georgia, 6 ret. 51,5, 570, '2 are
limitations upon the state authorities. But, with the exception of
these limitations, the states are supreme; and their sovereignty can
be no more invaded by the action of the ageneral government, than
the action of the state governments can arrest or obstruct the course
of the national power.'
The force of what has been said is not broken by an acceptance
of the view that the state is not coerced by the federal law. The
effect of the dual distribution of powers is completely to deny to
the states whatever is granted exclusively to the nation, and, con­
vers~lyto en to the nation whatever is reserved exclusively to
the states. "The determination of the Framers Convention and
the ratifying conventions to preserve complete and unimpaired state
self-government in all matters not committed to the general gov­
ernment is one of the plainest facts which emerge from the history
of their deliberations. And adherence to that determination is in­
cumbent equally upon the federal government and the states. State
powers can neither be appropriated on the one hand nor abdicated
on the other." Carter v. Carter Coal Co., 8upra, p. 295. The pur­
pose of the Constitution in that regard does not admit of doubt or
qualification; and it can be thwarted no more by voluntary sur­
render from within than by invasion from without.
Nor may the constitutional objection suggested be overcome by
the expectation of public benefit resulting from the federal par­
ticipation authorized by the act. Such expectation, if voicey in
support of a proposed constitutional enactment, would be quite
proper for the consideration of the legislative body. But, as we
sadin the Carter case, 8upra, p. 291-"1nothing is more certain
than that beneficient aims, however great or well directed1 can never
serve in lieu of constitutional power."7 Moreover, everything which
the act seeks to do for the relief of unemployment might have been
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 25
accomplished as is done by this same act for the relief of the mis­
fortunes of oid age, without obliging the state to surrender, or share
with another government, any of its powers.
If we are to survive as the United States, the balance between
the powers of the nation and those of the states must be main­
tained. There is grave danger in permitting it to dip in either
direction, danger-i-lf there we-re no other-in the precedent thereby
set for further departures from the equipoise. The threat implicit
in the present encroachment upon the administrative functions of
the states is that greater encroachments, and encroachments uponl
other functions, willfollow.
For the foregoing reasons, I think the judgment below ehould be
reversed.
Mr. Justice VAN D.EvANTER joins in this opinion.
 SUPREME COURT OF THE UNITED STATES
No. 837.-OCTrOBER TERM, 1936.

Petitioner,
DaisW.
1the
JCourt
Chas. C. Steward Machine Company, On Writ of Certiorari to
U~nited States Circuit
of Appeals for the
Harwell G.DvsIndividually and as Fifth Circuit.
Collector of internal Revenue.
[May 24, 1937.]
Mr. Justice BUTLER, dissenting.
I think that the objections to the challenged enactment expressed
in the separate opinions of Mr. Justice McREYNoLDs and Mr. Justice
SUTHERLAND are well-taken. I am also of opinion that, in principle
and as applied to bring about and to gain control over state unem­
ployment compensation, the statutory scheme is repugnant to the
Tenth Amendment: "The powers not delegated to the United States
by the Constitution, nor prohibited by it to the States2 are reserved
to the States respectively, or to the people". The Constitution grants
to the United States no power to pay unemployed persons or to
require the States to enact laws or to raise or disburse money for
that purpose. The provisions in question, if not amounting to cloer­
cion in a legal sense, are manifestly designed and intended directly
to affect state action in the respects specified. And, if valid as so
employed, this '"tax and credit" device may be made effective to en­
able federal authorities to induce, if not indeed to compel, state enact­
ments for any purpose within the realm of state power and generally
to control state administration of state laws.
The Act creates a Social Security Board and imposes upon it the
duty of studying and making recommendations as to legislation and
as to administrative policies concerning unemployment compensation
and related subjects. § 702. It authorizes grants of money by the
United States to States for old age assistane, for administration
of unemployment compensation, for aid to dependent children, for
maternal and child welfare and for public health. Each grant
depends upon state compliance with conditions prescribed by federal
authority. The amounts given being within the discretion of the
Congress, it may at any time make. available federal money sufficient
effectively to influence state policy, standards and details of admin­
istration.
The excise laid by § 901 is limited to specified employers. It is
not imposed to raise money to pay unemployment compensation.
27
28 CONSTITUTIONALITY OF TIM~ SOCIAL SECURITY ACT

But it is imposed having regard to that subject for, upon enactment

of state laws for that purpose in conformity with federal require­
mnents specified in the Act each of the employers subject to the
federal tax becomes entitled to credit for the amount he pays into
an unemployment fund under a state law up to 90 per cent. of the
federal tax. The amounts yielded by the remaining 10 per cent. not
assigned to any s feifpupose, may be applied to pay the federal
contributions and expenses in respect of state unemployment com­
pensation. It is not yet possible to determine more closely the sums
that will be needed for these purposes.
When the federal Act was passed Wisconsin was the only State
paying unemployment. compensation. Though her plan then mn force
is by students of the subject generally deemed the best yet devised she
found it necessary to chang her law in order to secure federal
approval. In the absence of thaet, Wi1sclonsin employers subject to
the federal tax would not have been allowed any deduction on
account of their contribution to the state fund. Any State would be
mnoved to conform to federal requirements not utterly objectionable,
in order to save its taxpayers from the federal tax imposed in addi­
tion to the contributions under state laws.
Federal agencie's prepared and took draft bills to state legislatures
to enable and induce them to pass laws providing for unem­
ployment compensation in accordance with federal requirements and
thus to obtain relief for the employers from the impending federal
exaction. Obviously the Act creates the peril of federal tax not to
raise revenue but to persuade. Of course, each State was free to
reject any measure so proposed. But, if it failed to adopt a plan
acceptable to federal authority the full burden of the federal tax
would be exacted. And, as federal demands similarly conditioned
may be increased from time to time as Congress shall determine,
posble federal pressure in that field is without limit. Already at
leoassti 43 States, yielding to the inducement resulting immediately
from the application of the federal tax and credit device, have pro­
vided for unemployment compensation in form to merit approval
of the Social Security Board. Presumably the remaining States
will comply whenever convenient for their legislatures to pass the
necessary laws.
The terms of the measure make it clear that -the tax and credit
device was intended to enable federal officers virtually to control
the exertion of powers of the States in a field in which they alone
have jurisdiction and from which the United States is by the Con­
stitution excluded.
I am of opinion that the judgment of the Circuit Court of Ap­
peals should be reversed.
 SUPREMWE COURT OF THE UNITED STATES
No. 910.-OaroBER TERM, 1936.

Guy T. Helvering, Commissioner of In­

ternal Revenue, and William M. Welch,
Collector of Internal Revenue for the On Writ of Certiorari to
District of Massachusetts, the United States Cir-
The Edison Electric Illuminating Corn- cuit Court of Appeals
pany of Boston, Petitioners, for the First Circuit.
'Vs.
George P. Davis, Respondent.
[May 24, 1937.]
Mr. Justice CAm~ozo delivered the opinion of the Court.
The Social Security Act (Act of August 14, 1935, c. 531, 49 Stat.
620, 42 U. S. C., c. 7, (Supp.)) is challenged once again.
In No. 837, Steward Machbine Co. v. Davis - U ., decided this
day, we have upheld the validity of Title ~IX of teatipsn
an excise upon employers of eight or more. In this cas ils II
and II are the subject of attack. Title VIII lays another excise upon
employers in addition to the one imposed by Title IX (though with
different exemptions). It lays a special income tax upon employees
to be deducted from their wages and paid by the employers. Title II
provides for the payment of Old Age Benefits, and supplies the mo­
tive and occasion, in the view of the assailants of the statute, for the
levy of the taxes imposed by Title VIII. The plan of the two titles
will now be summarized more fully.
Title VIII, as we have said, lays two different types of tax, an
"income tax on emp~loyees"), and "an excise tax on employers". 'The
income tax on employees is measured by wages paid during the cal­
endar year. Section 801. The excise tax on the employer is to be
paid "with respect to having individuals in his employ", and, like
Pthe tax on employees, is measured by wages. Section 804. Neither
tax is apLicbl to certain types of employment, such as agricultural
labor, dtomes-tic service, service for the national or state governments,
and service performed by persons who have attained the age of 65
years. Section 811 (b). The two taxes are at the same rate. Sec-.
tions 801, 804. For the years 1937 to 1939, inclusive, the rate for' each
tax is fixed at one per cent. Thereafter the rate increases '/2 of 1
per cent every three years, until after December 31, 1948, the rate for
each tax reaches 3 per cent. Ibid. In the computation of wages all
remuneration is to be included except so much as is in excess of $3,000
29
30 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

during the calendar year affected. Section 811 (a). The income tax
on employees is to be collected by the employer, who is to deduct the
amount from the wages "as and when paid". Section 802 (a). He
is indemnified against claims and demands of any person by reason
of such payment. Ibid. The proceeds of both taxes are to be paid
into the Treasury like internal-revenue taxes generally, and are not
earmarked in any way. Section 807 (a). There are penailties for non­
payment. Section 80 (c).
Title II has the caption "Federal Old-Age Benefits." The benefits
are of two types, first, monthly esos and second, lump sum pay­
ments, the payments of the second class being relatively few and
unimportant.
The first section of this title creates an account in the United
States Treasury to be known as the "Old-Age Reserve Account".
Section 201. No present appropriation, however, is made to that
account. AUl that the statute does is to authorize appropriations
annually thereafter, beginning with the fiscal year which ends June
30, 1937. How large they shall be is not known in advance. The
"6amount sufficient as an annual premium" to provide for the required
payments is "to be determined on a reserve basis in accordance with
accepted actuarial principles, and based upon such tables of mor­
tality as the Secretary of the Treasury shall from time to time adopt,
and upon an interest rate of 3 per centum per annum compounded
annually." Section 201 (a). Not a dollar goes into the Account
by force of the challenged act alone, unaided by acts to follow.
Section 202 and later sections pr~escribe the form of benefits. The
principal type is a monthly pension payable to a person after he
haS attained the age of 65. This benefit is available only to one who
has worked for at least one day in each of -at least five, separate
years since December 31, 1936, who has earned at least $2,000 since
that date, and who is not then receiving wages "with respect to
regular employment." Sections 202 (a), (d), 210 (c). The bene­
fits are not to begin before January 1, 1942. Section 202 (a). In
no event are they to exceed $85 a month. Section 202 (b). They
are to be measured (subject to that limit) by a percentage of the
wages, the percentage decreasing at stated intervals as the wages
become higher. Section 202 (a). In addition to the monthly bene­
fits, provision is made in certain contingencies for "lump sum pay­
ments" of secondary importance. A summary by the Government
of the four situations calling for such payments is printed in the
margin.'
I (1) If through an administrative error or delay a person who is receiving at monthly
pension dies hefore he receives the correct amount, the amount which should have been
paid to him Is paid In a lump sum to his estate [Section 203 (c) J.
(2) If a person who has earned wages In each of at least five separate years since
December 31, 1936, and who has earned In that period more than $2,000, dies after
attaining the age of 65~but before he has received In monthly pensions an amount equal
to 3M%percent of the 'wages" paid to him between January 1, 1937, and the time he
reaches 65, then there Is paid In a lump sum to his estate the difference between said
3%/ percent and the total amount paid to him during his life as monthly pensions [Section
(O
3 )(bIf*a person who has earned wages since December 31, 1936, dies before attaining
the age of 65, then there Is paid to his estate 3%Apercent of the "wages"* paid to him
between January 1, 1937 and his death (Section 203 (a)].
(4) If a person has since December 31, 1936. earned wages In employment covered by
Title II, but has attained the age of 65 either without working for at least one day In
each of 5 separate years since 1936, or without earning at least $2,000 between January
1, 1937, and the time he attains 65, then there is paid to him [or to his estate, Section
204 (b)]1, a lump sum equal to 3% percent of the "wages" paid to him between January
1, 1937~, and the time he attained 65 [Section 204 (a)].
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT] 31
This suit is brought by a shareholder of the Edison Electric Illumi­
Cmpay ofBosona Massachusetts corporation, to restrain
natig
thecororaionfro maingthe payments and deductions called for
actthwhc is
by tatdt be void under the Constitution of the
Sate. Th bil tllsus that the corporation has decided to
Unitd
obey the statute, that it has reached this decision in the face of the
complainant's protests, and that it will make the payments and de­
ductions unless restrained by a decree. The expected consequences
are indicated substantially as follows: The deductions from the
wages of the employees will produce unrest among them, and 'will
be followed~it is redicted', by demands that wages be increased.
If the exactions shai ultimately be held void, the company will have
parted with moneys which as a practical matter it will e ipossible
to recover. Nothing is said in the bill about the promise of indem­
nity. The prediction is made also that serious consequences will
ensue if there is a submission to the excise. The corporation and its
shareholders will suffer irreparable loss, and many thousands of dol­
lars will be subtracted from the value of the shares. The prayer is
for an injunction and for a declaration that the act is void.
The corporation appeared and answered without raising any issue
of fact. Later the United States Commissioner of Internal Revenue
and the United States Collector for the District of Massachusetts
petitioners in this court, were allowed to intervene. They movedi
to strike so much of the bill as has relation to the tax on employees,
taking the ground that the employer not being subject to tax under
those-prvsosiay not challenge their validity, and that the com­
plainant shareholder, whose rights are no greater than those of his
corporation, has even less standling to be heard on such a question.
The intervening defendants also fiMed an answer which restated the
point raised in the motion to strike, and maintained the validity of
Title VIII in all its parts. The District Court held that the tax upon
employees was not properly at issue, and that the tax upon employers
was constitutional. It thereupon denied the prayer for an injunction,
and dismissed the bill. On appeal to the Circuit Court of Appeals
for the First Circuit, the decree was reversed, one judge dissent­
ing. - F. (2d) -. The court held that Title II was void as an
invasion of powers reserved by the Tenth Amendment to the states
or to the people, and that Title II in collapsing carried Title VIII
along with it. As an additional reason for invafidating the tax upon
emp yers the court held that it was not an excise as excises were
understood when the Constitution was. adopted. Cf. Da~vi8 v. Boaton
& Maine R. R. Co., - F. (2d) -, decided the same day.
A petition for certiorari followed. It was filed by the intervening
defendants, the Commissioner and the Collector, and brought two
~estions, and two only to our notice. We were asked to determine:
1"whether the tax imposed upon employers by Section 804 of the
Eocial Security Act is within the power of Congress under the Con­
stitution", and (2) "whether the validity of the tax imposed upon
employees by Section 801 of the Social Security Act is properly in
issue in this case, and if it is, whether that tax is within the power of
Congress under the Constitution." The defendant corporation gave
notice to the Clerk that it joined in the petition, but it has taken no
part in any subsequent proceedings. A writ of certiorari issued.
32 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

First:Questions as to the remedy invoked by the complainant con­

front us at the outset.
Was the conduct of the company, in resolving to pay the taxes a
legitimate exercise of the discretion of the directors? Has peti­
tioner a standing to challenge, that resolve in the absence of an
adequate showing of irreparable injury? Does the acquiescence of
the company in the equitable remedy affect the answer to those
questions? Though power may still be ours to take such objec­
tions for ourselves, is acuiecenc effective to rid us of the
dutyI Is duty modified stl uther by the attitude of the Gov­
erunment, its waiver of a defense under section 3224 of the Revised
Statutes, its waiver of a defense that the legal remedy is adequate
its earnest request that we determine whether the law shall stanc
or fall? The writer of this opinion believes that the remedy is ill
conceived, that in a controversy such as this a court must refuse
to give equitable relief when a cause of action in equity is neither
pleaded nor proved, and that the suit for an injunction should be
dismissed upon that ground. He thinks this course should be fol­
lowed in adherence to the general rule that constitutional questions
are not to be determined in the absence of strict necessity. In that
view he is supported by Mr. Justice BwRANDis, Mr. Justice SToNE
and Mr. Justice Rowm~Ts. However, a majority of the court have
reached a different conclusion. They find in this case extraordinary
features making it fittin in their Judgment to determine whether
the benefits and ithe taxes are valid or invalid. They distinguish
Norman v. Consolidated Gas8(o., - F. (2d)- recently decided
by the Court of Appeals for the Second Cirui't on the ground
that in that case, the remedy was challenge~d by the company and
the Government at every. stage of the proceeding, thus withdrawing
from the court any marg-al discretion. The ruling of the majority
removes from the case the preliminary objection as to the nature of
the remedy which we took of our own motion at the beginning of
the argument. Under the compulsion of that ruling, the merits are
now here.
Second: The scheme of benefits created by the provisions of Title
II is not in contravention of the limitations of the Tenth Amendment.
Congress may spend money in aid of the "general welfare".
Constitution, tArt. I, section 8; United States v. Butler, 297 U. S.
1, 65; Steward Machine CJo. v. Davi8, 8upra. There have been great
statesmen in our history who have stood for other views. We will
not resurrect the contest. It is now settled by decision. United
States v. Butler, 8upra. The conception of the spending power advo-7
cated by Hamilton and strongly reinforced by Story has prevailed
over that of Madison which has not been lacking in adherents. Yet
difficulties are left,W~en the power is conceded. The line must still
be drawn between one welfare and another, between particular and
general. Where this shall be placed cannot be known through a
:Forula in advance of the event. There is a middle ground or cer­
tainly a penumbra in which discretion is at large. The discretion,
however, is not confided to the courts. The discretion belongs to
Congress, unless the choice is clearly wrong, a display of arbitrary
power, not an exercise of judTnent. This is now familiar law.
'When such a contention comes ere we naturally require a showing
that by no reasonable possibility can the challenged legislation fall
within the wide range of discretion permitted to the Congress."
 CONSTITUTIONALITY OF THIE SOCIAL SECURITY ACT~ 33
'United States v. Butler, 8upra, p. 67. Cf. Cinoiniuzti Soap Co. v.
'UnitedStates, May 3 1937, - U. S. -; United State8 v. Realty Co.,
163- U. S. 427, 440; Aread Money Cases, 112 U. S. 580, 595. Nor is
the concept of the general welfare static. Needs that were narrow
or parochial a century ago may be interwoven in our day with the
well-bein of the nation. What is critical or urgent changes with
the times.
The purge of nation-wide calamity that began in 1929 has taught
us many lessons. Not the least is the solidarity of interests that
may once have seemed to be divided. Unemployment spreads from
state to state, the hinterland now settled that in pioneer days gave
an avenue of escape. Home Building c&Loan Association v. Blais­
dell, 290 U. S. 398, 442. Spreading from state to state, unemploy­
ment is an ill not particular but general, which may be checked, if
Con&Tes so determines, by the resources of the nation. If this
can have been doubtful until now, our ruling today in the case of
the Steward Machine CO. 8upra, has set the doubt at rest. But
the ill is all one or at least not greatly different whether men are
thrown out of work because there-is no longer work to do or because
the disabilities of age make them incapable of doing it. Rescue
becomes necessary irrespective of the cause. The hope behind this
statute is to save men and women from the rigors of the poor house
as well as from the haunting fear that such a lot awaits them when
journey's end is near.
Congress did not improvise a judgment when it found that thQ
award of old age benefits would be conducive to the general welfare.
The President's Committee on Economic Security made an investi­
gation and report, aided by a research staff of Government officers
and employees, and by an Advisory Council and seven other ad­
visory groups. 2 Extensive hearings followed before the House Com.­
mittee on Ways and Means, and the Senate Committee on Finance."
A great mass of evidence was brought together supporting the
policy which finds expression in the act. Among the relevant facts
are these: The number of persons in the United States 65 years of
age or over is increasing proportionately as well as absolutely.
What is even more important the number of such persons unable
to take care of themselves is growing at a threatening pace. More
and more our population is becoming urban and industrial instead
of rural and agricultural.' The evidenc is impressive that among
industrial workers the -younger men an women are preferred over
the older.' In time of retrenchment the older are commonly the
first to go, and even if retained, their Wages are likely to be
lowered. The plight of men and women at so low an age as 40 is
hard, almost hopeless, when they are driven to seek for reemploy­
ment. Statistics are in the brief. A few illustrations will be
chosen from many there collected. In 1930, out of 224 American
factories investigated, 71, or almost one third, had fixed maximum
hiring age limits; in 4 plants the limit was under 40; in 41 it was
under 46. In the other 153 plants there were no fixed limits, but in
'Report to the President of the Committee on Economic Security, 1930.
'Herins
bfoe te HuseComittee on Ways and Maean n~H R. 4120, 74th
Conres,
1t sssin; earngsbefrethe Senate conmmite on- -- inance on S. 1i30,
'SeeReprt
f te Cmmiteeon Recent Social Trends, 1932, vol. i, pp. 8, 502;
Thomsonandwhepton PoulaionTrends In the United States pp. 18, 19.
'Se
auhortis
th clletedat p.54-62 of the Government's brief.
34 CONSTITUTIONALITY OF THE SOCIAL SECURITY AOT

practice few were hired if they were over 50 years of age." With
the loss of savings inevitable in periods of idleness, the fate of
workers over 65, when thrown out of work, is little less than des­
perate. A recent study of the Social Security Board informs us
that "one-fifth of the aged in the United States were receiving old-
age assistance, emergency relief, institutional care employment
under the works program, or some other form of aiA from public
orxprivate funds; two-fifths to one-half were dependent on friends
adrelatives, one-eighth had some income from earnings; and pos­
sibly one-sixth had some savings or property. Approximately three
out of four persons 65 or over were probably dependent wholly or
partially on others for support." 7" We summarize in the margin
the results of other studies by state and national commnissions.8
They point the same way.
The problem is plainly national in area and dimensions. Moreover,
laws of the separate states cannot deal with it effectively. Congress,
at least, had a basis for that belief. States and local governments
are often lacking in the resources that are necessary to finance an
adequate program of security for the aged. This is brought out with
a wealth of illustration in recent studies of the problem." Apart
from the failure of resources, states and local governments are at
times reluctant to increase so heavily the burden of taxation to be
borne by their residents for fear of placing themselves in a position
of economic disadvantage as compared with neighbors or com­
petitors. We have seen this in our study of the problem of unem­
ployment compensation. Steward Machine C7o. v. Davis, 8ujpra. A
system of old age pensions has special dangers of its own, if put in
force in one state and rejected in another. The existence of such a
system is a bait to the needy and dependent elsewhere, encouraging
them to migrate and seek a haven of repose. Only a power that is
national can serve the interests of all.
Whether wisdom or unwisdom resides in the scheme of benefits
set forth in Title III it is not for us to say. The answer to such
inquiries must come from Congress, not the courts. Our concern
here as often is with power, not with wisdom. Counsel for re­
1F4iring and Separation Methods In American Industry, 35 Monthly Labor Review, pp.
105.
1 1009.
Economic Insecurity In Old Age (Social Security Board, 1937), p. 15.
5 The Senate Committee estimated, when Investigating the present act, that ever one
half of the people in the United States over 65 years of age are dependent upon others
for support. Senate Report, No. 628, 74th Congress, 1st Session, p. 4. A similar estimate
was made in the Report to the President of the Committee on Economic Security, 1935,
p.24.
A Report of the Pennsylvania Commission on Old Age Pensions made in 1919 (p. 108)
after a study of 16.281 persons and interviews with more than 3,300 persons 65 years and
over showed two fifths with no Inceme hut wages and one fourth supported by children;
1.5Aper cent had savings and 11.8 per cent had property.
Areport on old age pensions by the Massachusetts Commission on Pensions (Senate
No. 5. 1925, pp. 41, 52) showed that In 1924 two thirds of those above 65 had, alone or
with a spouse, less than $5,000 of property, and one fourth had none. Two thirds of
those with less than $5,000 had Income of less than $1,000 were dependent in whole or In
part on others for support.
A report of the New York State Commission made In 1930 (Legis. Doc. No. 67, 1930,
p. 39) showed a condition of total dependency as to 58 per cent of those 65 and over,
and 62 per cent of those 70 and over.
The national Government has found In connection with grants to states for old age
assistance under another title of the Social Security Act (Title I) that In February, 1937,
38.8 per cent of all persons over 65 In Colorado received public assistance; in Oklahoma
the percentage was 44.1, and In Texas 37.5. In 10 states out of 40 with plans approved
by the Social Security Board more than 25 per cent of those over 65 could meet the
residence requirements and qualify under a means test and were actually receiving public
aid. Economic Insecurity In Old Age, supra, p. 15.
"Economic Insecurity in Old Age, oupra, chap. VI, pD.184.
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 35

spondent has recalled to us the virtues of self-reliance and frugality.

There is a possibility, he says, that aid from a paternal government
may sptose sturdy virtues and breed a race of weaklings. If
Massac usett so believes and shapes her laws in that conviction,
must her breed of sons be changed, he asks, because some other
philosophy of govermnent finds favor in the halls of Congress? But
the answer is not doubtful. One might ask with equal reason
whether the system of protective tariffs is to be set aside at will in
one state or another whenever local policy prefers the rule of lai8sez
faire. The issue is a closed one. It was fought out long ago."' When
money is spent to promote the general welfare, the concept of wel­
fare or the opposite is shaped by Congress, not the states. So the
concept be not arbitrary, the locality must yield. Constitution, Art.
VI, Par. 2.
Third: Title II being valid, there is no occasion to inquire whether
Title VIII would have to fall if Title II were set at naught.
The argument for the respondent is that the provisions of the two
titles dovetail in such a way as to justify the conclusion that Congress
would have been unwilling to pass one without the other. The argu­
ment for petitioners is that the tax moneys are not earmarked, and
that Congress is at liberty to spend them as it will. The usual Sep­
arability clause is embodied in the act. Section 1103.
We find it unnecessary to make a choice between the arguments,
and so leave the question open.
Fourth: The tax upon employers is a valid excise or duty upon
the relation of employment.
As to this we need not add to our opinion in Steward Machine
Co. v. Davi8, 8upra, where we considered a like question in respect
of Title IX.
Fifth: The tax is not invalid as a result of its exemptions.
Here again the opinion in Steward Machine Co. v. Davi8, 8UPra,
says all that need be said.
Sixvth: The decree of the Court of Appeals should be reversed and
that of the District Court affirmed.
Ordered accordingly.
Mr. Justice MCREYNoLDs and Mr. Justice BTimxR are of opinion
that the provisions of the Act here challenged are repugnant to the
Tenth Amendment, and that the decree of the Circuit Court of
Appeals should be affirmed.
15 IV Channing. History of the United States, p. 404 (5outh Carolina Nullification)

8Adams, History of the United States (New England Nuliiation and the Hartford
Convention).
 SUPREME COURT OF TILE UNITED) STATES
Nos. 724, 797.--Ocmomm TERm, 1936.

Albert A. Carmichael, Individually

and as Attorney General of the State
of Alabama, et al., Appellants,
724 V08. Appeals from the District
Southern Coal & Coke Company. Court of the United
Albert A. Carmichael, Individually DStrite fof AlabaMa.dl
and as Attorney General of the State Dsrc fAaaa
of Alabama, et al., Appellants,
797 W0.
Gulf States Paper Corporation.
[May 24, 1937.]
Mr. Justice STONM delivered the opinion of the Court.
The questions for decision are whether the Unemployment Com­
pensation Act of Alabama infringes the due process and equal pro­
tection clauses of the Fourteenth Amendment, and whether it is
invalid because its enactment was coerced by the action of the Fed­
eral government in adopting the Social Security Act, and because
it involves an unconstitutional surrender to the national government
of the sovereign power of the state.
Appellee, the Southern Coal & Coke Co., is a Delaware corpora­
tion employing more than eight persons in its business of coal min­
ing in Alabama. Appellee, Gulf States Paper Corporation, is a
Delaware corporation employing more than eight persons in its
business of manufacturing paper within the state. They brought
the present suits in the District Court for the Middle District of
Alabama, to restrain appellants, the Attorney General and the Un­
employment Compensation Commission of Alabama, from collecting
the money contributions exacted of them by the provisions of the
Alabama Unemployment Compensation Act. From the decrees of
the district court, three judges sitting (Jud. Code, § 266, 28 U. S. C.
§ 380), granting the relief prayed, the case comes here on appeal.
Jud. Code, § 238 (3), 28 U. S. C. § 345 (3).
The Unemployment Compensation Act, Ala. Acts 1935, No. 447;
Ala. Code of 1928 (1936 Cum. Supp.) § 7597, as amended by Acts
of 1936, Nos. 156, 194, 195, and Acts of Feb. 10, 1937, and March 1,
1937, Spec. Sess. 1937, sets up a comprehensive scheme for providing
unemployment benefits for workers employed within the state by
87
O'S CONSTITUTIONATITY OF THE SOCIAL SECURITY ACT

employers designated by the Act. These employers include all who

employ eight or more persons for twenty or more weeks in the year,
§ 2 (f), except those engaged in certain specified employments.'. It
imposes on the employers the obligation to pay acertain percentage
of their total monthly payrolls into the state ]Unemployment Com-_
pensation Fund, administered by appellants. For 1936 the levy is .9
of 1%; for 1937 it is 1.8%o, and for 1938 and subsequent years it is
2.7%. § 4 (b). In 1941 and thereafter the rates of contribution by
employers are to be revised in accordance with experience, but in no
case are they to be less than 1½/or more than 4%o of the payroll.
§4 (c). After May 1, 1936, each employee is required to contribute
1%o of his wages to the fund. § 4 (d). The fund is to be deposited
in the "Unemployment Trust Fund" of the United States Govern­
ment, § 3 (d), cf. Social Security Act, § 904 (a), and is to be used as
requisitioned by the St-ate Co~mmission, to pay unemployment bene­
fits prescribed by the statute, §§ 3 (b), 3 (d), but without any liability
on the part of the state beyond amounts paid into or earned by the
fund. Benefits are payable from the fund to the employees covered
by the Act, in the event of their unemployment, upon prescribed con­
ditions and at prescribed rates.
The Act satisfies the criteria which, by § 903 (a) of the Social
Secur'ity Act of August 14, 1935, c. 531, 49 Stat. 620, 640, 42 U. S. C.
§ 1103 (a), 'areomade prerequisite to its approval by the Social Security
Board created by that Act, and it has been approved -by the Board as
that section directs. By § 902 of the Social Security Act, contributors
to the state fund are entitled to credit their contributions in satisfac­
tion of the tax imposed on employers by the Social Security Act, to
the extent of 90%7 of the tax. See No. 837, Chas. C. Steward
Machine Co. v. Davis, decided this day.
In the court below, the statute was assailed as repugnant to various
provisions of the state constitution. These contentions have been put
at rest by the decision of the Supreme Court of Alabama in Beeland
Wholesale Comnpany v. Kaufman, - Ala. -, holding the state act
valid under both the state and federal constitutions. The statute was
also attacked on the ground that the Social Security Act is invalid
under the Federal Constitution, since the state act declares that it
"shall become void" if the Supreme Court of the United States shall
hold the Social Security Act invalid. The Alabama court interpreted
the statute as having operative effect only if the Social Security Act
were constitutional-even in advance of a decision by this Court. We
need not decide whether the state court's ruling that the federal statute
I See 5 2 (g). "Employment" Is deflned to exclude:
i~ Agicultural labor;
2 mestic service in a private home;
3)Srieperformed as an officer, bar pilot, or member of the crew of a vessei on the
navgabe
wter ofthe United States ;
(4) Service performed by an individual In the employ of his son, daughter, or spouse,
and service performed by a child under the age of twenty-one in the employ of his father
or mother;
(5) Serv~ice performed In the employ of the United States Government or of an instru­
mentality of the United States;
(6) Service performed in the employ of a carrier engaged In interstate commerce and
subject to the Act of Congress known as The Railway Labor Act; as amended or as
hereafter amended. Service performed by those engaged as solicitors or agents for Insur­
ance Companies;
(7) Service performed In the employ of a state, or political subdivision thereof, or an
instrumentality of one or more states or political subdivisions;
(8) Service performed in the employ of a corporation, community chest, fund, or foun­
dation, organized and operated exclusively for religious, charitable, scientific, literary
or educational purposes, or for the prevention of cruelty to children or animals, no pari
of the net earnions of which Inures to the benefit of any private shareholder or Individual.
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 39
is valid is conclusive upon us for the purpose of determining whether
the state law is presently in force, Miller`s Excecutors v. Swann, 150
U. S. 182; Lou ville & Nashsville R. Co. v. 'Westeru Union TelegrapA
Co., 237 U. S. 300, because its conclusion as to the validity of th
federal act agrees with our own, announced in Chazs. C. Steward
Machine Co. v. Davis, 8upra.
Attacks were leveled on the statute on numerous other grounds1
which are urged here,-as an infringement of the due process and
equal protection clauses of the Fourteenth Amendment as an uncon­
stitutional surrender to the United States government of the sovereign
power of the state, and as a measure owing its passage to the coercive
action of Congress in the enactment of the Social Security Act.
In Beeland -Whole-sak Company v. Kaufman, 8upra, the Supreme
Court of Alabama held that the contributions which the statute exacts
of employers are excise taxes laid in conformity to the constitution and
laws of the state. While the particular name which a state court or
legislature may give to a money payment commanded by its statute is
not controlling here when its constitutionality is in question, cf. Edu­
cationalFilms Co. v. Ward, 282 U. S. 379, 387; StoraasliV.Minnesota,
283 U. S. 52', 62; 'Wagner v. City of Covington, 251 U. S. 95, 102;
Standard Oil Co. v. Graves, 249 U. S. 389, 394, we see no reason to
doubt that the present statute is an exertion of the taxing power of the
state. Cf. Carley and Hamiltonv. Snook, 281 U. S. 66, 71.
Taxes, which are but the means of distributing the burden of the
cost of government, are commonly levied on property or its use
but they may likewise be laid on the exercise ofppersonal rights and
privileges. As has been pointed out by the opinion in the Cluas. C7.
Steward Machine,Co. case, such levies, including taxes on the exer­
cise of the right to employ or to be employed, were known in Eng­
land and the Colonies before the adoption of the Constitution, and
must be taken to be embraced within the wide range of choice of
subjects of taxation, which was an attribute of the sovereign power
of the states at the time of the adoption of the Constitution, and
which was reserved to them by that instrument. As the present
levy has all the indicia of a tax, and is of a type traditional in the,
history of Anglo-American legislation, it is within state taxing
power,,and it is immaterial whether it is called an excise or by
another name. See Barwige v. Sheppard, 299 U. S. 33, 36. Its valid­
ity under the Federal Constitution is to be determined in the light
of constitutional principles applicable to state taxation.
.ALI~iTY OF THLE TAX UNDER THB FOU'RTEENT AMENDMENT

First. Validity of the Tax, Qua Tax. It is inherent in the exer­

cise of the power to tax that a state be free to select the subjects of
taxation and to grant exemptions. Neither due process nor equal
protection imposes upon a state any rigid rule of equality of taxa­
tion. See Bell's Gap R. Co. v. Pennsylvania, 134 U. S. 232, 237;
Lawrence v. State Taxo Commission, 286 U. S. 276, 284. This Court
has repeatedly held that inequalities which result from a singling
out of one particular class for taxation or exemption, infringen
constitutional limitation. Magoun v. Ill. Trust cO Savings an 170
U. S. 283 293; American Sugar Refining Co. v. Louisiana, 19#.S.
89, 94; 2frmour Packing Co. v. Lacy, 200 U. S. 226, 235; Brown­
40 CONSTITUTIONALITY OF THlE SOCIAL SECURITY ACTP

Forman Co. v. Kentucky, 217 U. S. 563, 573; Quong Wing v. Kirken­

dall, 223 U. S. 59, 62, 63; Armour &f Co. v. Virginia, 246 U. S. 1, 6;
Alaska Fish Co. v. Smith, 255 U. S. 44, 48; State Board of Tax Corn­
mnissioners v. Jackson, 283 U. S. 527, 537; Broad River Power Co. v.
Querry, 288 U. S. 178, 180; Fox v. Standard Oil Co., 294 U. S. 87, 97;
No.649 CincinnaztiSooa~ Co V. United States, May 3, 1937 -No. 652,
Graitlantic TePP
a' Compan~y v. GrosJean, Miay 1~, 1937.
Like considerations govern exemptions from the operation of a
tax imposed on the members of a cfass. A legislature is not bound
to tax every member of a class or none. It may make distinctions
of degree having a rational basis, and when subjected to judicial
scrutiny they must be presumed to rest on that basis if there is any
conceivable state of facts which would support it. Rast v. Van
Deman & Lewis, 240 U. S. 342, 357; Heisler v. Thomas Colliery Co.,
260 U. S. 245, 255; Swiss Oil Corp. v. Shanks, 273 U. S. 407, 413;
Lawrence v. State Tax Commission supra; cf. Metropolitan Casualty
insuranceCo. v. Brownell, 294 U. §. 580, 584.
This restriction upon the judicial function, in passing on the con­
stitutionality of statutes, is not artificial or irrational. A state leg­
islature, in the enactment of laws, has the widest possible latitude
within the limits of the Constitution. In the nature of the case it
cannot record a complete catalogue of the considerations which
move its members to enact laws. In the absence of such a record
courts cannot assume that its action is carcouo that, with its
informed acquaintance with local conditions to which the legis­
lation is to be applied, it was not aware of facts which afford rea­
sonable basis for its action. Only by faithful adherence to this
guiding principle of judicial review of legislation is it possible to
preserve to the legislative branch its rightful independence and its
ability to function.
(a) Exclusion of Employers of Less than Eight. Distinctions
in degree, stated in terms of differences in number have often been
the target of attack, see Booth v. Indiana, 237 U. §. 391, 397. It is
argued here, and it was ruled by the court below, that there can be
no reason for a distinction, for purposes of taxation, between those
who have only seven employees and those who have eight. Yet, this
is the type of distinction which the law is often called upon to make. 2
It is only a difference in numbers which marks the moment when day
ends and night begins, when the disabilities of infancy terminate
and the status of legal competency is assumed. It separates large in­
comes which are taxed from the smaller ones which are exempt, as
it marks here the difference between the proprietors of larger busi­
nesses who are taxed and the proprietors of smaller businesses who
are not.
Administrative convenience and expense in the collection or meas­
urement of the tax are alone a sufficient justification for the.difference
between the treatment of small incomes or small taxpayers and that
meted out to others. Citizens' Telephone Co. v. Fuller, 229 U. S.
2St. Louis Consol. Coal Co. v. Illinois, i85 U. S. 203, 207 (coal mines employing five or
more subject to inspection) ; McLean v' Arkansas 211 U. S. 539, 55i (mines employing ten
or more required to measure coal for payment of wages before screening) ;Booth v.
Indiana, 237 U. S. 39T,39 (mines required to supply wash-houses upon demand of
twenty employees) ; .Tefrey Mfg. Co. v. Blagg, 235 U. 5. 571, 5.76; Middleton v. Texas
P'ower & L. Co., 249 U. S. 152, 159 (employers of five or more Included within workmen's
compensation act).
 CONSTITUTIONALITY OF THM SOCIAL SECURITY ACTl 41
822, 832; Hatch v. Reardon, 204 U. S. 152, 159; New York v. Latrobe,
279 U. S. 421, 428; Aero Transit Co. v. Georgia Public Service
Comm., 295 U. S. 285, 289. Cf. Florida Centralc&PeninsularR. Co.
v. Reynolds, 183 U. S. 471, 480; PackerCorp. v. Utah 285 U. S. 105,
110, footnote 6.. We cannot say that the expense an inconvenience
of collecting the tax from small employers would not be dispropor­
tionate to the revenue obtained. For it cannot be assumed that the
legislature could not rightly have concluded that generally the num­
ber of employees bears a relationship to the size of the payroll and
therefore to the amount of the tax, and that the large number of
small employers and the paucity of their records of employment
would entail greater inconvenience in the. collection and verification
of the tax than in the case of larger employers.
It would hardly be contended that the state, in order to tax pay­
rolls, is bound to assume the administrative cost and burden of tax­
ing all employers having a sigl emploee. But if for that or any
other reason it may exempt some,eowhet her it should draw -the line
at one, three, or seven, is peculiarly a question for legislative de­
cision. The decision cannot be said to be arbitrary because -it falls
in the twilight zone between those members of the class which plainly
can and those which plainly cannot expediently be taxed.
(b) Exemption of Particular Classes of Employers. It is arbi­
trary, appellees contend, to exempt those who employ agricultural
laborers, domestic servants, seamen, insurance agents, or close rela­
tives, or to exclude charitable institutions, interstate railways, or the
government of the United States or of any state or political subdi­
vision. A sufficient answer is an appeal to the principle of taxation
already stated, that the state is free to select a particular class as a
subject for taxation. The character of the exemptions suggests
simply that the state has chosen, as the subject of its tax, those who
employ labor in the processes of industrial production and distri­
bution.
Reasons for the selections, if desired, readily suggest themselves.
Where the public interest is served one business miay be left un­
taxed and another taxed, in order to promote the one, American
SRugar Refminin Co. v. Louisiana, supra;.Heisler v. Thomas Colliery
Co., 8upra - A ero Transit Co. v. Georgia Public Service Comm.,
supra, or to restrict or suppress the other, Magnano Company v.
Hamilton, 292 U. S. 40; Fox v. Standard Oil Co., 8upra; Quong
Wing v. Kirkendall suia*Singer Sewing Machine Co. v. Brickell,
233 U. S. 304; Alas ish Co. V,. Smith, supra, 48; Great Atlantic
& Pacific Tea Company v. (Jro8yean1 8upra. The legislature may
withhold the burden of the tax in order to foster what it conceives
to be a beneficient enterprise. This Court has often sustained the
exemption of charitable institutions, Bell's Gap R. Co. v. Pennsyl­
v.ania, supra, 237; cf. Board of Educationv. Illinois, 203 U. S. 558,
563, and exemption for the encouragement of agriculture, Ameri­
cnSugar Refining Co. v. Louisiana., 8upra, 95- Aero Transit Co. v.
Georgia Public Service Comm., 8upra, 291. similarly, the legisla­
ture is free to aid a depressed industry such as shipping. The ex­
emption of business operating for less than twenty weeks in the year
may rest upon similar reasons, or upon the desire to encourage
seasonal or uinstable industries.
42 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

Administrative considerations may explain several exemptions.

Relatively great expense and inconvenience of collection may justify
the exemption from taxation of domestic employers, farmers, and
family businesses, not likely to maintain adequate employment rec­
ords, which are an important aid in the collection and verification
of the tax. The state may reasonably waive the formality of taxing
itself or its political subdivisions. Fear of constitutional restric­
tions, and a wholesome respect for the proper policy of another
sovereign, would explain exemption of the United States, and of
the interstate railways, comp~are Packer Corp. v. Utah, supra, 109.
In no case do appellees sustain the burden which rests upon them of
showing that there are no differences, between the exempt employers
and the industrial employers who are taxed, sufficient to justify
differences in taxation.
(c) Tax on Employees. Appellees extend their attack on the
statute from the tax imposed on them as employers to the tax im­
posed on employees. But they cannot object to a tax which they
are not asked to pay, at least if it is separable, as we think it is,
from the tax they must pay. The statute contains the usual sep­
arability clause. § 19. The taxation of employees -is not prere­
quisite to enjoyment of the benefits of the Social Security Act. The
collection and expenditure of the tax on employers do not depend
upon taxing the employees, and we find nothing in the language
of the statute or its application to suggest that the tax on employees
is so essential to the operation of the statute as to restrict the effect
of the separability clause. Distinct taxes imposed by a single stat­
ute are not to be deemed inseparable unless that conclusion is un­
avoidable. See Field v. Clark, 143 U. S. 649, 697; No. 614, Sonzinslcy
v. United States, March 29 1937.
From what has been said, it is plain that the tax qua tax confornis
to constitutional requirements, and that our inquiry.as to its validity
would end at this point if the proceeds of the tax were to be covered
into the state treasury, and thus made subject to appropriation by the
legislature.
Second. Validity of the Taxo as Determined by Its Purposes. The
devotion of the tax to the purposes specified by the Act requires our
consideration of the objections pressed upon us that the tax is in­
valid because the purposes are invalid, and because the methods
chosen for their execution transgress constitutional limitations. It
is not denied that since the adoption of the Fourteenth Amend­
ment state taxing power can be exerted only to effect a public pur­
pose and does not embrace the raising of revenue for private pur­
poses. See Green v. Frazier,253 U. S. 233, 238; Milheimi v. Moffat
Tunnel Dist., 262 U. S. 710, 717; FallbrookIrrigationDist. v. Bradw­
ley, 164 U. S. 112, 158; Jones V.. City of Portland,245 U. S. 217, 221.
The states, by their constitutions and laws, may set their own limits
upon their spending power, see Loan Association v. Topeka, 20 Wall.
655; cf. Parkeersburgv. Brown., 106 U. 5. 487; Cole v. La GrangFe,
113 U. S. 1, but the requirements of due process leave free scope for
the exercise of a. wide legislative discretion in determining what
expenditures winl serve the public interest.
This Court has long and consistently recognized that the public
purposes of a state, for which it may raise fund~s by taxation, embrace
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 43
expenditures for its general welfare. Falibrook IrrigationDiet. v.
Bradley, supra7 161; Green 'v. Frazier,supra,240, 241. The existence
of local conditions which, because of their nature and extent, are of
concern to the public as a whole, the modes of advancing the public
interest by correcting them or avoiding their consequences, are pe­
culiarly within the knowledge of the legislature, and to it, and not to
the courts, is committed the duty and responsibility of makting choice
of the possible methods. See Fallbrook IrrigationDiet. v. Bradley,
8upra, 160; Jones v. City of Portland,8U a, 221, 224, 225; -Green.v.
Frazier,supra, 239, 240. As with expendirtures for the general wel­
fare of the United States, United States v. Butler, 297 U. S. 1, 67;
Helvering et al v. Davis, supra, whether the p resent expenditure
servs apubic
urpse s apractical question addressed to the law­
makig
dparment an itwould require a plain case of departure
fromevey
pblicpurosewhich could reasonably be conceived to
jusif
th iterenionofa court. See Cincinnati Soap Co. v.
UntdStates, 8upra; cf. J'one8 v. City of Portland, 8upra. The
presn case exhibitS nO such departure.
(a) Relief of Unemployment as a Public Purpose. Support of the
poor has long been recognized as a public purpose, see Kelly v. Pitts­
burgh 104 U. 5. 78, 81. We need not labor the point that expendi­
tures ior the 'relief of the unemployed, conditioned on unemployment
alone, without proof of indigence of recipients of the benefits, is a
permissible use of state funds. For the past six years the nation,
unhappily has been placed in a position to learn at first hand the
nature and extent of the problem of unemployment, and to appre­
ciate its profound influence upon the public welfare. Detaileac
counts of the problem and its social and economic conseq-uences, to be
found in public reports of the expenditures of relief funds,. and in the
studies of many observers, afford a basis for the legislative judgment.
It suffices to say that they show that unemployment apparently has
become a permanent incident of our industrial system; that it varies,
in extent and intensity,. with fluctuations 'in the volume of seasonal
businesses and with the business cycle. It is dependent, with special
and unpredictable manifestations, upon technological changes and
advances in methods of manufacture, upon changing demands for
manufactured products--dictated by changes in fashion or the crea­
tion of desirable substitutes, and upon the establishment of new
sources of competition.
The evils of the attendant social and economic wastage permeate
the entire social structure. Apart from poverty, or a less extreme
impairment of the savings which afford the chief protection to the
working class against Old age and the hazards of illness, a matter
of inestimable consequence to society asawhlndprtfo
the loss of purchasing power, the legislature could have concluded
that unemployment brings in its wake increase in vagranc~y and
crimes against property,3 reduction in the number of marriages, 4
Sheee.g National Commission on Law Observance and Enforcement (1931), Report on
theause ofCrime, No. 13, especially p. 312.
'From 1924 to 1932, inclusive, the marriage rate In Alabama, determined by marriages
rr 1,000 population, was as follows: i114, 11 9* 11.9; 11.6; 11.2; 11.2; 10.4; 9 7 -9 4
[derived from Statistical Abstract of thetntd'tae.12,Tbe0;4.98.lae
95; id., 1930 Table 99; 44id,1982, Table 50; id., 1936, Table 92]. The first sizeable decline
came In 193(i.
44 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

deterioration of family life, decline in the birth rate,5 increase 11L

illegitimate births,6 1impairment of the health of the unemployed and
their families 7 an'd malnutrition of their children."
Although employmenat in Alabama is predominantly in agricul­
ture, and the court below found that agricultural unemployment
is not an -acute problem, the census reports disclose the steadily
increasing percentage of those employed in industrial pursuits in
Alabama." The total amount spent for emergency relief in Ala­
bama, in the years 1933 to 1935 inclusive, exceeded $47,000,000, of
which $312,000 came from state funds, $2,243,000 from local
sources and the balance from relief funds of the federal govern­
ment.- 0 These figures bear eloquent witness to the inability of
local agencies to cope with the problem without state action and
resort to new taxing legislation. Expenditure of public funds
under the present statute for relief of unemployment, will afford
some protection to a substantial group of employees,1" and we
cannot say that it is not for a public purpose.
The end being legitimate, the means is for the legislature to choose.
When public evils ensue from individual misfortunes or needs, the
legislature may strike at the evil at its source. If the purpose is
legitimate because public, it will not be defeated because the execu­
tion of it involves payments to individuals. Kelly v. Pittsburgh,
supra;Knights v. Jackson, 260 U. S. 12, 15; of. Mountain Timber Co.
V' Washington, 243 U. S. 219, 239-240. "Individual interests are
aided only As the common interest is safeguarded." See Cochran v.
Louisiana State Board of Education, 281 U. S. 370, 375; cf. Clark
v. Nash, 198 U. S. 361, 36t; Hairston v. Danville c&Western Ry. Co.,
208 U. S. 598, 608; Noble State Bank v. Haskell, 219 U. S. 104, 110.
,See State Board of Health, Bureau of Vital Statistics, Report relating to the registra­
tion of births and deaths in the State of Alabania for the year ending 31st December, 1935,
p., XXXVII: "Between 1910 and 1927, the trend in the birth rate was upward, except in
118, the year In which the outbreak of influenza occurred and the followving year. From
1927 to 1935, the trend has been downward, the rate of decline having been practically
constant since 1928 forward, with the single exception in 1934. The rise in 1934 was due
to a number of factors, including an increase in birth registration following the registra­
tion campaign and marriages."
aSee Annual Report of the State Board of Health of Alabama, 1933, p. 166. Table XXV.
The rate of illegitimate births per 1,000 live births, for the years 1929 through 1933, were
70.4; 74.6; 81.6 ; 88.7 ; 95.1.
' A survey of 4,137 people in Birmingham, Alabama and covering three months In the
spring of 1933, showed that the rate of illness [disabling illness per 1,000 persons] was
165 in families with no employed workers; 148 in families with at least one part-time
worker, but no full-time workers; and 1.40 in families with at least one full-time wvorker.
See Perrott and Collins, Relation of sickness to income and income change In 10 surveyed
communities, Public Health Reports (United States Public Health Service), vol. 50, p. 595,
at 606, Table 6.
.See Eliot, Martha M., Some effects of the depression on the nutrition of children,
Hospital Social Service, vol. 28, p. 385; Palmer, Carroll U., Height and weight of childreni
of the depression poor, Public Hpalth Reports, vol. 50, p. 1106.
9Of those employed In Alabama the per cent. employed In industry were 19.5% in
1900; 21.4% in 1910; 30.7% in 1920; 33.6% In 1930; 24.3% In 1935. (Last figure
estimated at the trial by Gist, formerly statistician of the Department of Agriculture,
and since Feb 1 1936 economic adviser, to the Commissioner of Agriculture of Alabama.)
The decline In Ib35 n~ay he taken to corroborate the greater susceptibility of employment
in industry to the depression.,
'- Figures obtained from Federal Emergency Relief Administration, as stated In Ap­
endix tothe Brief of Respondent, No. 837, Chas. C. Steward Machine Co. v. Davis, pp.
AppeTalee pon1 oa7siae ht agl eaueo h ag grclua oua
tion on~lyl281pofn thosen employted inat Alareybam auase
ofOtobelrgeag14,ualppua
tio, oly
hos 6.80/.of
emloyd i Albam asof ctoer 4,193 , were covered by
the Act.
ABut it was estimated at the trial by Gist [formerly statistician of the Department of
Agriculture, and since Feb. 1, 1936, economic adviser to the Commissioner of Agriculture
ofAlabama], that if in 1941 there should be a recurrence of unemployment "somewhat
equivalent to the period we have just come through and employment in the Industrial
groups under consideration should drop to, say 170,600 [aproximuately the number em­
pioyed In 1932], we would find Alabama with something like 64,000 unemployed persons
who would he entitled to the benefits of this Act."
 CONSTITUTIONALITY OF THE SOCIAL SECURITY A(Yr 45
(b) Extension of Benefits. The present scheme of unemployment
relief is not subject to any constitutional infirmity, as respondents
argue, because it is not limited to the indigent or because it is ex­
tended to some less deserving than others, such as those discharged
for misconduct. While we may assume that the state could have
limited its award of unemployment benefits to the indigent and to
those who had not been rightfully discharged from their employ­
mnent, it was not bound to do so. Poverty -is one, but not the only
evil consequence of unemployment. Among the benefits sought by
relief is the avoidance of destitution, and of the gathering cloud
of evils which beset the worker, his family and the community after
wages cease and before destitution begins. We are not unaware that
industrial workers are not an affluent class and we cannot say that
a scheme for the award of unemployment benefits, to be made only
after a substantial "waiting period"lof unemployment, and then
only to the extent of half wages and not more than $15 a week for
at most 16 weeks a year, does not effect a public purpose, because it
does not also set up an elaborate machinery for excluding those
from its benefits who are not indigent. Moreover, the state could
rightfully decide not to discourage thrift. Mountain Timber Co. v.
Was~hington, 8upra, 240. And as the in~jurious effects of unemploy­
ment are not limited to the unempoydworker, there is scope for
legislation to mitigate those effect~s, even though unemployment re­
sults from his discharge for cause.
(c) Restriction of Benefits. Appellees again challenge the tax by
attackingi as arbitrary the classification adopted bythe legislature
for the dstribution of, unemployment benefits. O y the employee
c3f those subject to the tax share in the benefits. Appellees com­
plain that the relief is withheld from many as deserving asthose
who receive benefits. The choice of beneficiaries, like the selection
of the subjects of the tax, is thus said to be so arbitrary and dis­
criminatory as to infringe the Fourteenth Amendment and deprive
the statute of any public purpose.
What we have said as to the validity of the choice of the subjects
of the tax is applicable in large measure to the choice of beneficiaries
of the relief. In establishing a system of unemployment benefits
the legislature is not bound to occupy the whole field. It may
strike at the evil where it is most felt, Otis v. Parker, 187 U. S. 606.
610; Carroll v. Greenwich Inmurance Co., 199 U. S. 401, 411 -
Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61, 81; Cent~ra
Lumber Co. v. South Dakota, 226 U. S. 157, 160; -Rosenthal v. New
York, 226 U. S. 260, 270; Patsone v. Pennsylvania, 232 U. S. 138,
144; Keokee Coke Co. v. Taylor, 234 U. S. 224, 22'T; Silver v. Silver,
280 U. S. 117, 123; Hardware Dealers Mutual Fire Ins. Co. v. Glid­
den Co., 284 U. S. 151, 159, or where it is most practicable to deal
with it, Dominion Hotel, Inc. v. Arizona, 249 U. S. 265,, 268-269. It
-way exclude others whose need is less, N. Y., N. H. & Hartford R.
Co. v. New York 165 U. S. 628, 634; St. Louis Consol. Coal Co. v.
Illinois, 185 U. 9. 203, 208; Engel v. O'Malley, 219 U. S. 128, 138;
N. Y. Central R. Co. v. 'White, 243 U. S. 188, 208; Radice v. New
York 264 U. S. 292, 294; No. 293, 'West Coast Hotel Co. v. Parrish,
Marc 29, 1937, or whose effective aid is attended by inconvenience
which is greater, Dominion Hotel, Inc. v. Arizona, aupra; Atlantic
46 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

Coast Line R. Co. v. State, 135 Ga. 545, at 555-556, as affirmed and
approved, Atlantic Coast Line R. Co. v. Georgia, 234 U. S. 280, 289.
As we cannot say that these considerations did not lead to the
selection of the classes of employees entitled to unemployment bene­
fits, and as a state of facts may reasonably be conceived which would
support the selection, its constitutionality must be sustained. There
is a basis, ogrunds of administrative convenience and expense, for
adopting a classification which would permit the use of records, kept
by the taxpayer and open to the tax agatherer, as an aid to the admin­
istration of benefit awards, as is the case here, where the recipients
of benefits are selected from the employees of those who pay the tax.
Special complaint is made of the discrimination against those with
only six co-workers, as contrasted with those who have more. We
have already shown that a distinction in terms of the number of
employees is not on its face invalid .' 2 Here the legislative choice
finds support in the conclusion reached by students of the problem,' 3
that unemployment is less likely to occur in businesses having a small
number of employees.
Third. Want of Relationship Between the Subjects and Benefits
ofthe Taxe. It is not a valid objection to the present tax, conforming
in other respects to the Fourteenth Amendment, and devoted to a
public purpose, that the benefits paid and the persons to whom they
are paid are unrelated to the persons taxed and the amount of the
tax which they pay-in short, that those who pay the tax may not
have contributed to the unemployment and may not be benefited by
the expenditure. Appellees' contention that the statute is arbitrary,
in so far as it fails to distinguish between the employer with a low
unemployment experience and the employer with a hi'rh unemploy­
ment experience, rests upon the misconception that t'here must be
such a relationship between the subject of the tax (the exercise of
the right to employ) and the evil to be met by the appropriation of
the proceeds (unemployment). We have recently stated the appli­
cable doctrine. "But if the tax, qua tax, be good, as we hold it is,
and the purpose specified be one which would sustain a subsequent
and separate appropriation made out of the general funds of the
Treasury, neither is made invalid by being bound to the other in
the same act of legislation." CincinnatiSoap Co. v. United States,
Pupa.
othng s mre amiliar in taxation than the imposition
ofupnta clss r uonindividuals who enjoy no direct benefit
fromitsexpnditreandwhoare not responsible for the condition

12See aupra, footnote 2.

u W. I. King, Employment Hours and Earnings In Prosperity and Depression; Hansen,
Bjornaraa, and Sogge, Decline of employment in the 1930-i03i depression In St. Paul,
Minneapolis and Duluth, U. of Minn., Employment Stabilization Research Institute, vol.
1, No. 5, p. 20-25.
'CACigarette and tobacco taxes are earmarked, In some states, for school funds and edu­
ational fmrPoses, Ala. Acts 1927, No. 163, II 2 (J) (k) Acts 1932, No. 113, §i5; Ark.
Acts 193., Nos. 135, 140, 1 2; Tenn. Code (1932), J i24; Tex. Laws 1935 c. 241, § 3,
and In Georgia for pensions for Confederate soldiers, Ga. Laws 1923, UPp.39, 'i1.
Liquor license fees and taxes are paid into old age pension funcds, Colo. Laws 1933.
BP; es., c. 12, 1 27; potle pension funds N Y Tax Law (1934) 55 4, 4-a; and school
funde, N. M. Laws 1933 c. 159, 5 10 (b) ; WUs Laws Sp. Seas. 1933-34, chs 3 14.
Chain store taxes are sometimes earmarked for school funds, Ala. Acts i19A5, No. 194,
3 348, schedule 155.9; Fla. Laws 1935, c. 16848, iS1; Idaho Laws 1933, c. 113, 1 10.
License and pari~mutupl taxes in states authorizing horse racing are devoted to fairs
and agricultural urposes, Cal. Stat, 1933, c. 769, 8 13; Ill. Rev. Stat. (Cahill, 1933) c.
88, 1 316 (6) ; Mich. Acts 1933, c. 199, 1 10; to highway funds, Nev. Comp. Laws (11111.
Yer4 1929) 1 6223; and to an old age pension fund in Washington Laws 1933 C. 55, 5 9.
dnemploymeut relief, though financed in most states by special bond iss'us, has In
 CONSTITUTIONALITY OF THE, SOCIAL SECURITY ACT 47
A tax is not an assessment of benefits. It is, as we have said, a
means of distributing the burden of the cost of government. The only
benefit to which the taxpayer is constitutionally entitled is that derived
from his enjoyment of the privileges of living in an organized society,
established and safeguarded by the devotion of taxes to public pur­
poses. See CincinnatiSoap Co. v. United State8, 8upra. Any other
view would preclude the levying of taxes except as they are used to
compensate for the burden on those who pay them, and would involve
the abandonment of the most fundamental principle of government-
that it exists primarily to provide for the common good. A corpora­
tion cannot object to the use of the taxes which it pays for the -mainte­
nance of schools because it has no children. Thomas v. Gay, 169
U. Q. 264, 280. This Court has repudiated the suggetion, whenever
made, that the Constitution requires the beneft derived from the
expenditure of public moneys to be apportioned to the burdens of the
taxpayer, or that hie can resist the payment of the tax because it is
not expended for purposes which are peculiarly beneficial to him .' 5
Cincinnati Soap Co. v. United State8, 8upra' Carley & Hamilton v.
Snook, 8upra, 72; Nashville, C. c&St. L. R. 6 o. v. NWallace, 288 U. S.
249, 268; see Union Transit Co. v. Kentucky, 199 U. S. 194, 203.
Even if a legislature should undertake, what the Constitution does
not require, to place the burden of a tax for unemployment benefits
upon those -who cause or contribute to unemployment, it might con­
clude that the burden cannot justly be apportioned among employ­
ers according to their unemployment experience. Unemployment
in the plant of one employer may be due to competition with an­
other, within or without the state, whose factory is running to ca­
pacity; or to tariffs, inventions, changes in fashions or in market
or business conditions, for which no employer is responsible, but
which may stimulate the business of one and impair or even destroy.
that of another. Many believe that the responsibility for the busi­
ness cycle, the chief cause of unemployment, cannot be apportioned
to individual employers in accordance with their employment ex-
p rec;that a business may be least responsible for the depression
forom whcich it suffers the most.
The Alabama legislature may have ~roceeded upon the view, for
which there is abundant authority, t at the causes of unemploy­
ment are too complex to admit of a meticulous appraisal of em­
ployer responsibility.'16 It may have concluded that unemployment
some Instances been financed by Gasoline Taxes, Ohio Laws 19.83, File No. 8, 11, 2;
File No. 28: Okla. Laws 1931, c. 66, article 10, Ii 2, 3; Sales Taxes, Ill. Laws 1933, pp.
924, 926: Mich. Acts 1933, No. 167, § 25 (b) ; Utah Laws 1933, c 63 J 21; Income
Taxs,
193,c.
is.Law
63,1 2 MicelanousExcse axe 'Oioden, Code (Page
Supp 195)
(ber); 1554-2 cosetis) I 5442
622-4 ~dmisions)
; Utah Rev.
'5imiarl,
txin ditrits
secil or he ainenace f radsor public Improve­
th dstrct sstaned wihou poofof he atre or amount of
mens wthi avebee
S. Luis&Se . W By Co v.Matin,277U. . 57, 159 ; Memphis
speialbenfit.
& Chcag By Co.v. 5 41,248,249 cf Misour Paifi R.Co. v. Western
ace282
Crafor 26RodU.5.Dst. 87.A dffeentquetio isp rseted when a state
undetaks
loal tssesmets
ley aporiond t locl bnefts.In that case, if it
fails to conform to th stnado aprtinment adotdisactn is arbitrary, see
Georgia By. & Elec. Co . 165, 170, bease there iadealof
S.Dctr,23U equal
protection. Road Improee Dt.V.
t issouri Pacific R. Co., 274 U.5 8,191-194,
cf. Georgia By. & Elec. Co. v. Decatur, 297 U S. 620. But if the assesmetIs appor­
tioned to benefits It is not constitutionally defective because the assessment exceeds the
benefits.
5 Roberts v. Richland Irrigation Dist., 289 U. S. 71, 75.
' Report of President Hoover's Committee on Recent Social Trends (1933) 807 If 3 M.
Clark, Economics of Overhead Costs (1929) pp. 366-367; Douglas. Hitchcock, and Atkins,
The Worker in Modern Economic Society (1925)&p 491 et seq; Beveridge, Unemployment, a
Problem of Industry (1930)p 0-0;W icel usns yls h rbe
and its setting (1927) pp. 87, V0 10213;8 .C icel.uies yls h rbe
48 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

is an inseparable incident of modern industry, with its most serious

manifestations in industrial production; that employees will be best
protected, and that the cost of the remedy, at least until more ac­
curate. and complete data are available, may best be distributed by
imposing the tax evenly upon all industrial production,"' and in
such form that it will be added to labor costs which are ultimately
absorbed by the public in the prices which it pays for consumable
goods.
If the question were ours to decide, we could not say that the
legislature, in adopting the present scheme rather than another, had
no basis for its choice, or was arbitrary or unreasonable in its action.
But, as the state is free to distribute the burden of a tax without
regard to the particular purpose for which it is to be used, t~ir
is no warrant in the Constitution for setting the tax aside because
a court thinks that it could have drawn a better statute or could have
distributed the burden more wisely. Those are functions reserved
for the legislature.
Since the appellees may not complain if the expenditure has no
relation to the taxed class of which they are members, they ob­
viously may not complain because the expenditure has some relation
to that class, that those benefited are employees of those taxed;
or because the legislature has adopted the expedient of spreading
the burden of the tax to the consuming public by imposing it upon
those who make and sell commodities. It is irrelevant to the per­
missible exercise of the power to tax that some pay the tax who
have not occasioned its expenditure, or that in the course of the
use of its proceeds for a public purpose the legislature has benefited
individuals, who may or may not be related to those who are taxed.
RELATIONSHIP OF THE STATE AND FEDERAL STATUTES.

There remain for consideration the contentions that the state

act is invalid because its enactment was coerced by the adoption of
the Social Security Act, and that it involves an unconstitutional
surrender of state power. Even though it be assumed that the
exercise of a sovereign power by a state, in other respects valid,
may be rendered invalid because of the coercive effect of a federal
statute enacted in the exercise of a power granted to the national
government, such coercion is lacking here. It is unnecessary to
repeat now those considerations which have led to our decision in
the Chas. C. Steward Machine Co. case, that the Social Security Act
has no such coercive effect. As the Social Security Act is not
coercive in its operation, the Unemployment Compensation Act can­
not be set aside as an unconstitutional product of coercion. The
United States and the State of Alabama are not alien governments.
They coexist within the same territory. Unemployment within it
is their common concern. Together the two statutes now before
us embody a cooperative legislative effort by state and national
governments, for carrying out a public purpose common to both,
which neither could fully achieve without the cooperation of the
other. The Constitution does not prohibit such cooperation.
17See E. M. Burns, Toward Social Security (1936) pp. 70-73; P. Douglas, Social Security
In the United States (1936) pp. 253-355; A. Epstein, Insecurity- Callenge to America
(3d ed. 1936) pp. 311-812, 517; Hansen, Murray, Stevenson, and Stewart, A Program for
Unemnployment Tusurance and Relief in the United States (1934) pp. 10, 65-73.
 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT 49
As the state legislation is not the product of a prohibited coercion,
there is little else to which appellees can point as indicating a sur­
render of state sovereignty. As the opinion in the Chas C. Steward
Machine Co. case points out, full liberty of action is secured to the
state by both statutes. The unemployment compensation fund is
administered in accordance with state law by the state commission.
The statute may be repealed at the will of the legislature, and in that
case the state will be free to withdraw at any time its unexpended
share of the Unemployment Trust Fund from the treasury of the
United States, and to use it for any public purpose. And, for the
reasons stated in the opinion in the Cha8. C. Steward Machine Co.
case, we conclude that the deposit by the state of its compensation
fund in the Unemployment Trust Fund involves no more of a sur­
render of sovereignty than does the choice of any other depository
for state funds. The power to contract and the power to select ap­
propriate agencies and instrumentalities for the execution of state
policy are attributes of state sovereignty. They are not lost by their
exercise.
Many other arguments are pressed upon us. They require no dis­
cussion save as their answer is implicit in what de have said. The
state compensation act, on its face, and as applied to appellees, is
subject to no constitutional infirmity, and the decree below is
Reversed.
Mr. Justice MCREYNOLDS thinks that the decree should be affirmed.
 SUPREME~COURT OF THE UNITED STATES

Nos. 724, 797.-OCToBER Timm, 1936.

Albert A. Carmichael, Individually

and as Attorney General of the
State of Alabama, et al., Appel­
lants,
724 ~ VS. Apneals from the District
Southern Coal & Coke Company. ur of the United States
Albert A. Carmichael, Individually AlabaheMa. lDsrito
and as Attorney General of the Aaaa
State of Alabama, et al., Appel­
lants,
797 Vs.
Gulf States Paper Corporation.
[May 24, 1937.]
Mr. Justice SUTHERLAND, dissenting.
The objective sought by the Alabama statute here in question,
namely, the relief of unemployment, I do not doubt is one within
the constitutional power of the state. But it is an ObHetive which
must be attained by legislation which does not vioat the due
process or the equal-protection clause of the Fourteenth Amend­
ment. This statute, in my opinion, does both, although it would
have been a comparatively simplne matter for the legislature to
avoid both.
The statute lays a payroll tax upon employers, the proceeds of
-which go into a common fund to be distributed for the relief of
such ex-employees, coming within the provisions of, the statute,
as shall have lost their employment in any of a designated variety
of industries within the state. Some of these emppoyer are en­
gaged in industries where work continues the year round. Others
are engaged in seasonal occupations, where the work is discontinued
for a p~art of the year. Some of the employers are engaged 'in
industries where the number of men employed remains stable, or
fairly so, while others are engaged in industries where the number
of the men employed fluctuates getly fro time to time. 'Plainly,
a disproportionately heavy bur'enaw% be'imposed by the tax upon
those whose operations contribute least to teevils of inemploy­
61
52 CONSTITUTIONALITY OF THE SOCIAL SECURITY ACT

mientI and, correspondingly, the burden will be lessened in respect

of those whose operations contribute most.
An example will make this clear. Let us suppose that A, an
employer of athousand men, has retained all of his employees.
B, an employer of a thousand men, has dischar ed half of his
employees. The tax is upon the payroll of eac . A, who has
not discharged a single workman, is taxed upon his payroll twice as
mu~ch'as B, although the operation of B's estalisment has con­
tributed enormously to the evil of unemployment while that of A
has contributed nothing at all. It thus results that the employer
who has kept all his men at work pays twice as much toward the
relief of the employees discharged by B as B himself pays. More­
over, when we consider the large number and the many kinds of
industries, their differing characteristics and the varied circum­
stances by which their operations are conditioned, the gross uIn­
fairness of this unequal Turden of the tax becomes plain beyond
peradventure. It is the same unfairness, in an aggravated form,
as that which we so recently condemned asftly arbitrary in
Railroad Retirement Board v. Alton R. Co. 295 U. S. 330. That
case dealt with a federal statute which estafilished a pension plan
requiring payments to be made by all interstate railroad carriers
itapoled fund to bd used for the payment of annuities indis­
criminately to railroad employees, of whatever company, when they
had reached the age of 65 -years. This court, because of this pool­
ing faue among other things, held the act to be bad. We said
(p. 357) :
This court has repeatedly had occasion to say that the railroads, though
their property be dedicated to the public use, remain the private property of
their owners, and that their assets may not be taken without Just compensa­
tion. The carriers have not ceased to be privately operated and privately
owned, 'however much subject to regulation in the interest of Interstate com­
merce. There is no warrant for taking the property or money of one and
transferring It to another without compensation, whether the object of the
transfer be to build up the equipment of the transferee or to pension its
employees. . . . The argument Is that since the railroads and the public
have a common Interest in the efficient performance of the whole transportation
chain, It is proper and necessary to require all carriers to contribute to the cost
of a plan designed to serve this end. It Is said that the pooling principle Is
desirable because there are many small carriers whose employees are too few
to Justify maintenance of a separate retirement plan for each.
In support of that view, several cases had been cited. Those cases
were reviewed and distinguished, and we concluded, page 360­
that the provisions of the Act which disregard the private and separate owner­
ship of the several respondents, treat them all as a single employer, and pool
all their assets regardless of their Individual obligations and the varying con­
ditions found In their respective enterprises, cannot be justified as consistent
with due process.
Cases which are relied upon here to sustain the Alabama statute
were relied upon there to sustain the Retirement Act, Mountain.
Timber Co. v. 'Washington., 243 U. S. 219, among others. That case
dealt with the State of Washington workmen's compensation act,
rqiigdesignated payments to be made by employers into a state
fiudifrincompensating injured workmen. But we pointed out (295
U. S. 359) that although the payments were made into a common
fund, accounts were to be kept with each industry in accordance with
 CONSTITUTIONALITY OF TIIE SOCIAL SECURITY ACT 53
the classification, and no class was to be liable for the depletion of
the fund by reason of accidents happening in another class. And
we said:
The Railroad Retirement Act, on the contrary, makes no classification, but,
as above said, treats all the carriers as a single employer, irrespective of their
several conditions.
If the Alabama act had followed the plan of the Washington act
in respect of classification, we should have a very different question
to consider. The vice of the Alabama act is precisely that which
was condemned in the Railroad Retirement Board case. Indeed,
the vice is more pronounced, since the federal act, relating as it did
to railroads only, dealt with a homogeneous group of employers.
while the Alabama act seeks to impose the character of "a single
employer" upon a large number of employers severally engaged
in entirely dissimilar industries.
It must be borne in mind that we are not dealing with a general
tax, the proceeds of which are to be appropriated for any public
purpose which the legislature thereafter may select, but with a tax
expressly levied for a specified purpose. The tax and the use of the
tax are inseparably united; and if the proposed use contravenes the
Constitution, it necessarily follows that the tax does the same.
CincinnatiSoap Co. v. United State8, - U. S. -, -(May 3, 1937).
Other states have not found it impossible to adjust th'eir unem­
ployment laws to meet the constitutional difficulties thus piresented
by the Alabama act. The pioneer among these states is Wisconsin.
That state provides (Act of January 29, 1932, c. 20, Laws of Wise.
Spec. Sess., 1931, P. 57, as amended) that while the proceeds ol
the tax shall be p aid into a common fund, an account shall be kept
with each individual employer, to which account his payments are
to be credited and against which only the amounts paid to his former
employees are to be charged. If he maintains his roll of employees
intact, he will be charged nothing, and in any event only to the
extent that his employment roll is dimhinished. When his tax con­
tributions have reached a certain percentage of his payroll, the
amount of his tax is reduced, and when they. reach 10%, the tax is
discontinued as long as that percentage remains. The result is that
each employer bears his own burdens, and not those of his com.
petitor or of other employers. The difference between the Wisconsin
and the Alabama acts is thus succinctly stated by the Social Security
Board in its Informational Service Circular No. 5, issued November,
1936, pp. 8-9:
(1) The plan for individual employer accounts provides for employer-reserve
accounts in the State fund. Each employer's contributions are credited to his
separate account, and benefits are paid from his account only to his former
employees. If he is able to build up a specified reserve in his account, his
contribution rate is reduced.
Such is the Wisconsin plan; while under the Alabama statute­
(2) The pooled-fund plan provides for a pooling of all contributions In a
single undivided fund from which benefits are paid to eligible employees,
irrespective of their former employers.
Which of these plans is more advantageous from a purely eco­
nomic standpoint does not present a judicial q~uestion. But from
the constitutional point of view, in so f ar as it involves the ground
54 CONSTITUTIONALITY OF THE SOCIAL SECUTRITY ACT

upon which I think the Alabama act should be- condemned, I en­
tertain no doubt that the Wisconsin plan is so fair, reasonable and
just as to make plain its, constitutional validity; and that the Ala­
bma statute, like the New York statute involved in Chamberlin,
Inc. v. Andrews, et al., 299 U. S. 515, affirmed by an equally-divided
court during the present term, is so arbitrary as to result in a denial
both ofdue process and equal protection of the laws.
I am authorized to say that Mr. Justice VAN DEVANTER and Mr.
Justice Bmxt/T concur in this opinion.

0
75TH CONGRESS SENATE fPocvmmxT
1st Seasion I f No. 71

ORAL ARGUMENTS
IN HELVERING ET AL. v. DAVIS
INVOLVING

THE OLD AGE BENEFIT PROVISIONS

OF THE

SOCIAL SECURITY ACT

BEFORE THE

SUPREME COURT OF THE UNITED STATES

MAY 5, 1937

PRESENTED BY MR. WAGNER

MAY 11 (calendar day, MAY 12), 1937.-Ordered to be printed

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1987
 I CONTENTS
Page
Opening argument for the petitioner, by Mr. Robert H. Jackson ------------­
Argument for the respondent, by Mr. Edward F. McClennen ------------- 21
Closing argument for the petitioner, by Mr. Charles E. Wyzanski, Jr.- --- 35
in
 In the Supreme Court of the United States
OCTOBER TERM, 1936

No. 910
Guy T. HELVERING, COMMISSIONER, AND OTHERS, PETITIONERS
V.
GEORGE P. DAVIS, RESPONDENT

WASHINGTON, D. C.,
Wednesday, May 5, 1987.
The above-entitled cause came on for oral argument before the Chief
Justice and Associate Justices of the United States Supreme Court at
12:25 p. In.
Appearances:
For the petitioners: Mr. Robert H. Jackson, Assistant Attorney
General, Mr. Charles E. Wyzanski, Jr., Special Assistant to the
Attorney General.
For the respondent: Mr. Edward F. McClennen.
PROCEEDINGS

The CHIEF JUSTICE: No. 910, Guy T. Helvering against George P.

Davis.
OPENING ARGUMENT ON BEHALF OF PETITIONERS
HELVERING AND WELCH BY HON. ROBERT H. JACKSON,
ASSISTANT ATTORNEY GENERAL
Mr. JACKSON. May it please the Court, this cause reaches this
Court. by certiorari directed to the First Circuit Court of Appeals,
which has rendered a decision that title VIII of the Social Security
Act, imposing a tax upon employers, and also upon employees, and
also title Ii establishing a system of old-age benefits, are all uncon­
stitutional. The district court had dismissed the bill in this case,
holding that title V111 was constitutional as to the taxes imposed,
and that title II was not involved.
The bill is brought by a stockholder, who charges that the defend­
ant, Edison Electric Illuminating Co. of Boston, of which he- is a
stockholder, is about to pay an unconstitutional tax, that he has
protested without avail, and -that the payment, if not enjoined, will
be an irreparable injury to his stock equity. He also sought to ques­
tion the taxes imposed upon the employee, because the employer
I
2 ORAL ARGUMENTS
is made a withholding agent and required to withhold from the
employee's wages the amount of the tax and pay it to the collector.
That was sought to be questioned by the stockholder upon the
claim that it would cause "restlessness" among the employees.
The -answer filed by the corporation raised no question of fact or
substance. A motion was-made for atemporarymijunction. At that
point the collector and Commissioner of Internal Revenue intervened
and filed an answer, raising no question as to the regularity of the
procedure, except as to the employees' tax. It was denied that the
stockholder could question the validity of a tax which his corporation
did not have ultimately to pay.
The answer of the Government included a motion to dismiss. The
motion to dismiss was granted and the injunction denied. The
circuit court of appeals returned the case to the district court with
instructions that the act was unconstitutional.
The statute involved is the Social Security Act, title VIII, which
imposes a tax on employers and on employees, except those engaged
in agriculture, domestic service, and the like. The tax is payable to
the General Treasury. Title II is asserted to be involved, and,
beginning in 1942, it establishes monthly benefit payments for persons
65 years of age and upward, who have qualified under the act, and
certain death benefits for those who have qualified for them, but who
do not reach 65 years of age.
The decision of the circuit court of appeals is based upon several
propositions. The opinion appears at page 26 of the record, and the
reasoning upon which they have held these two titles to be uncon­
stitutional seems to be expressed in several quotations, which I will
make.
The first reason appears to be on page 27:
The assistance of those incapacitated by age from earning a livelihood is one
4of the powers belonging to, and burdens imposed on, the States at the time of
the adoption of the Federal Constitution.
Conceding that this tax is not an earmarked tax, nor a tax appro­
priated specifically to the purposes of title II, the Court nevertheless
continues with a finding that it was the intent of Congress that the
taxes raised under sections 801 and 802 of title VIII were imposed for
the express purpose of paying the old-age benefits provided in title II;
and it continues:
We think that the power to provide for old-age benefits was among those
Powers reserved to the States under the tenth amendment.
Justice STONE. Are you going to deal with the equity jurisdiction,
Mr. Jackson?
Mr. JACKSON. I had not intended to; but, of course, if there is a
question about it, I shall be glad to. I may say that we waived any
question as to equity jurisdiction; that we waived because of the vital
importance to the Government of an early decision in this case.
We recognize that there is some question as to the right of a stock­
holder to maintain an action of this kind and doubt as to whether he
sustains an irreparable injury under these circumstances. The Circuit
Court of Appeals of the Second Circuit has recently rendered a decision
that the stockholder is not injured.
Justice STONE. What was the relief prayed?
Mr. JACKSON. In this case?
Justice STONE. Yes.
 ORAL ARGUMENTS 3
Mr. JACKSON, It was an injunction to restrain the payment of the
tax which the stoekholder alleged the corporation would otherwise
make under the unconstitutional act.
Justice STONE. The collector was made a party?
Mr. JACKSON. The collector became -a. party upon his own inter­
vention, and raised rno question as to the procedure, or as to the right
of the stockholder to maintain the action, and, so far as he could,
expressly waived that question.
Justice STONE. So that the Government is in the position of sayin~g
here that a suit to enjoin a tax is properly here, although provision is
made for payment of the tax and for a suit to recover it, which would
give adequate relief, would it not, to the taxpayer?
Mr. JACKSON. We think that question, if raised by the Govern­
ment or by the defendant in the case, would have to be decided against
the stockholder. We believe that the Norman case, decided in the
second circuit (Apr. 12, 1937), is good law, but we also believe that it
is a question not of jurisdiction, but of fact, as to whether the stock­
holder is irreparably injured under the circumstances, and that it
can be waived by the Government, as was done in. Pollock v. Farmers'
Loan. & Trust Co. (157 U. S. 429), and I think in Brushaber v. Union
Pacific R. R. (240 U. S. 1).
Justice STONE. Conceding that is so, he would be equally protected
by a direction to pay the tax and sue to get it back?
Mr. JACKSON. Perhaps that is true.
Justice STONE. That is the procedure which the Government has
insisted should be followed, in most of these tax cases.
Mr. JACKSON. We have insisted on that 'in many cases.
Justice STONE. And having been disposed to be with them on
that, I wonder whether I should recede from that position now.
Mr. JACKSON. I should very much dislike to say anything that
would discourage you in that position, Your Honor. Our position is
that it can be waived, that it is not jurisdictional, and we waived it in
this case.
Justice STONE. Equity jurisdiction cannot be conferred by consent,
on the other hand.
Mr. JACKSON. I think, however, that the jurisdiction which depends
upon the question of fact as to irreparable injury can be waived, so as
to permit the cause to proceed. It is not a situation where the Court
has no jurisdiction to proceed to inquire into the facts. It is a case
where, if the facts are found to establish irreparable injury, as in
Ashwander v. Tennessee V-alley Authority (297 U. S. 288) and other
cases, then it is held that the Court may enter judgment.
Justice STONE. Is it not a little more than that? It has always
seemed to me that it was a question of large public policy, and a very
important one, that when a taxpayer is called upon to pay taxes and
there is an adequate remedy at law whereby he can pay the tax and
sue to get it back, the courts should keep away from granting in­
junctions.
Mr. JACKSON. I certainly agree that that should be the law, but
we have been subjected to many such injunctions. The law is
unsettled upon this subject of injunctions to restrain collection of
taxes.
Justice STONE. This may unsettle it still further, if you succeed.
Mr. JACKSON. I would not think so, if we succeed upon the ground
of waiver.
4 ORAL ARGUMENTS

Justice CARDOZO. I noticed in your brief, Mr. Attorney General,

that you put it upon the ground of the adequacy of the legal remedy.
I am wondering whether it is only that, whether there is not a question
of substantive law involved. In the T. V. A. case and cases of that
kind it was held that the directors had no discretion that would permit
them to make the unconstitutional payment or to yield to the uncon­
stitutional demand, because they would be committing the stock­
holders to a loss that would in all likelihood be irreparable. In this
case, was there not a discretion on the part of the directors to pay that
tax and afterward sue to get it back, thus avoiding penalties that
would be incurred if they refused to pay the tax?
Mr. JACKSON. I think there was such a discretion. In the Norman.
case, the Consolidated Gas Co. of New York asserted that discretion
and asserted that the directors were exercising their discretion, that
they preferred to pay the tax and pursue their remedy later. The
Edison Electric Illuminating Co., in this case, made no such assertion
but submitted only the question of law, as to the constitutionality
of the tax.
Justice CARDOZo. The only allegation in the, bill is that the Edison.
Co. proposes to pay this tax. Now, at the beginning, what else could.
the Edison Co. do? It could not have sued to restrain the collection
of the tax, because it had no warning that the Government was going
to waive the provisions of the statute, assuming that the Government,
could. All we have, that the Edison Co. proposes to do, apparently,
was the only thing that it could do-pay the tax and enter suit to get
it back.
Mr. JACKSON. But under the circumstances of this case, where an
intervention occurs by the Government, the Government becomes
bound by the decision. Certainly we could not intervene in the case,
and, if we were defeated in our contention as to constitutionality,
tben send the collector to distrain property of the taxpayer. Cer­
tainly if we then made a collateral attack on the judgment and said,
"Well, there was no equitable jurisdiction here", I would expect the
Court to say that our time for raising that question was past, and that
we were bound by the judgment, and that the collector could not dis­
train upon the corporation's property.
Justice CARDOZO. My difficulty is-perhaps it is not a true one-
that you are not merely waiving the objection that the remedy at law
is adequate but that the Government is attempting to say that a dis­
cretion which directors duly exercised shall be overridden, and I
question whether the Government can take away the discretionary
power of the directors.
Mr. JACKSON. We did not, Your Honor. They surrendered that
themselves. The corporation itself raised no such question, and it
was stilpulated by all parties concerned that the only question to be,
raised in the case was the validity of the taxing titles. So that the
Government has not interfered with the com'pany's asserting any
rights they wished; and, in the Norman.case, we were confronted with
exactly the situation which your question suggests. The Consoli­
dated Co. said that as a matter of managerial discretion it preferred
not to question the act, which it felt was constitutional, and preferred
to pursue its remedy, if any, by way of refund later. We joined in
that argument also, taking the same position. We have not thrust
upon the defendant in this case any waiver of its discretion. It has
voluntarily waived.
 ORAL ARGUMENTS 5
Justice CARDOZO. Will1 you refer me to the stipulation which you
say was made?
Mr. JACKSON. Mr. McClennen tells me that the stipulation was not
actually filed, and I have misled the Court in calling it a stipulation.
It seems to have been a "gentlemen's agreement", which has been
observed but not made of record.
Justice STONE. It would be time enough, since the company, ac­
cording to the allegation, stood ready to pay the tax to bring a suit in
equity, if irreparable injury will result from the payment of the tax,
to have brought a suit directing the company to sue for and recover
the tax which it had paid.
Mr. JACKSON. That would probably be true.
Justice STONE. So that if the bill were now dismissed or directions
were given to permit the company to pay the tax and then sue to
recover it, the Government would not suffer anything, would it?
Mr. JACKSON. The Government would have in this case, and I
propose, to state the reason for our waiver.
This action was brought in November 1936, and the tax was due
on February 28, 1937. This tax promised an estimated yield of
~$253,000,000 for the fiscal yeari 1937 and $621,000,000 for the following
fiscal year. It is being paid at the present time at the rate of $50,000,­
000 a month. It was important from a budgetary point of view that
we have this tax question settled at the earliest possible moment.
Administratively it was also very important. Some 26,000,000
people are paying taxes under this employee's tax, and 2,500,000
under the other tax, which meant that if this law were to be held
unconstitutional, the Treasury would be faced with 28,500,000 re­
funds-an enormous administrative task- and we exerted every effort
to obtain a decision in this case before we would be confronted with
that contingency.
We think the doubt of the right to sue is a question which can be
waived. The question is not clear, whether the stockholder can or
-cannot. It is a question of difficulty. We have waived it because
we are still confronted with this very practical situation; that 26,000,­
000 people are building up from day to day either the funds of the
U~nited States or refund claims, and it is imperative that we know
which it is; and for that reason we hope that the court will not find it
-necessary to decide this case on procedural grounds merely.
The question is covered in the brief, because we recognize that this
question faces us at the outset, and is one about which, if there were
not imperative practical considerations facing us, we probably would
be taking a somewhat different-position.
Having found that the general welfare was not served by this tax,
the circuit court of appeals also hold that the tax, separate and apart
from the use to which they determined the money should be put, was
unconstitutional, holding, in their own words, that it-
cannot be upheld as an excise tax authorized under section 8 of article I of the
Constitution, for the reasons stated-
in a companion case involving the un~employmnent titles-
since it was a tax on the natural and common right of employing labor, and is not
a tax on property manufactured, sold, or in use, or on a privilege granted by any
government, and was not within the purview of the framers of the Constitution.
It also held that this tax could not be sustained as a tax, because it
was not clearly within the purview of those who adopted the Consti-
S. Doe. 71, 75-1-2
6 ORAL ARGUMENTS
tution, and "where the application of a taxing statute is doubtful, it
should be resolved against the Government." It also held that
since this benefit system is confined to nonagricultural and non-do mes­
tic-service workers, the classification was bad, and held that both men
and women in the excepted classes, on reaching the age of 65, are
equally entitled with those engaged in other lines of work to old-age
benefits.
The Boston & Maine case, which was decided on the same, day, con­
tains a more lengthy exposition of the Court's reasoning.
Turning to the statute, I would ask the Court to first observe title I,
not because it is involved here, but because it is important to an under­
standing of the background of title II and of title VIII.
Title I of this act grants assistance to the States "for the purpose
of enabling each State to furnish financial assistance, as far as prac­
ticable under the conditions in such State, to aged needy individuals's­
and I ask you to note the,word "needy"-"to aged needy individuals,
there is hereby authorized to be appropriated for the fiscal year ended
June 30, 1936, the sum of $49,750,000", and there is authorized to be
appropiiated for subsequent years such sum as may be necessary.
"The sums made available nnder this section shall be used for making
payments to States which have submitted, and had approved by the
Social Security B~oard established by title VII ***State plans
for old-age assistance."
Then follow certain provisions about the State plans, which are not
important to us here, as this title is not involved. Under section 3,
the Federal participation is limited, so that from the sums appro­
priated, the Secretary of the Treasury shall pay to each Stiite an
amount to be used exclusively as old-ag~e assistance, equal to one-half
the total of the, sums expended under the State plan with respect to
each individual who at the time of such expenditure is 65 years of age
or older, and is not an inmate of a public institution, not counting so
much of such expenditure with respect to any individual for any month
as exceeds $30. Then 5 percent is paid for administration.
In other words, in this title, a. system of assistance to the States
by a matching system, under which each shall contribute 50 percent
of the cost, establishes aid, in the discretion of the State, up to $30
per month maximum, for those 65 years of age or over, and it is
based on the, need of the individual; to be ascertained, presumably,
by a means test.
The significance of this title, since it is not involved in this litiga­
tion, is entirely as background to the title that follows.
This provision is not limited to any particular group of workers.
It applies to the domestic, the agricultura~l worker, and all sorts and
conditions of men and women who find themselves in need at 65.
It is essentially the dole system based on need. It would require
proof of the qualification, which is that the individual is needy;
sometimes established by proof that the individual is himself needy,
and also by proof that the family on whom he might expect to rely is
also needy.
Justice SUTHERLAND. Is there a provision here, as in the case of
the unemployment provision, that the funds raised by the State must
be deposited with the United States Treasury?
Mr. JACKSON. No. This money is paid over to the State for
administration.
Justice SUTHERLAND. The State keeps the money?
 ORAL ARGUMENTS 7
Mr. JACKSON. Yes; but there are requirements as to what the
State law must contain.
Justice SUTHERLAND. Yes.
Mr. JACKSON. But they are not involved in this case.
Justice SUTHERLAND. The State is expected to raise a portion of
this fund?
Mr. JACKSON. Yes; 50 percent.
Justice SUTHERLAND. And that is not required to be paid into the
United States Treasury?
Mr. JACKSON. The State administers it itself.
Justice SUTHERLAND. It does what?
Mr. JACKSON. The State administers this title itself. It merely
gets Federal aid. It is much like the aid provision in Massachusetts v.
Mellon (262 U. S. 447).
Justice SUTHERLAND. In that respect it differs from the unemploy­
ment provision?
Mr. JACKSON. That is right.
Justice STONE. Are these payments made annually, or only as there
is need?
Mr. JACKSON. Quarterly, as I recall it.
Justice STONE. And the fund is held in the State custody or posses~
sion until such time as it is required?
Mr. JACKSON. I think it is turned over to the State, as a matter of
fact, for each quarter, and there is not any substantial accumulation.
The CHIEF JUSTICE. No; it is paid over for each quarter. There is
no restriction upon the State's action in relation to it, except, of
course, as to the requirements of the State law, which are approved
by the Social Security Board.
Mr. JACKSON. That is right, and it is set forth in section 4, as to the
operation of the State plans, and in section 2 as to requirements for
approval of State plans.
Justice SUTHERLAND. I want to be sure about that. As I under­
stand it, there is no interference on the part of the Federal Govern­
ment with the administration of the fund by the State government.
Mr. JACKSON. No; except that there are certain limitations.
Justice SUTHERLAND. As to the legislation?
Mr. JACKSON. Yes.
Justice SUTHERLAND. But not as to the administration of the fund?
Mr. JACKSON. No. It is a pure matter of Federal aid to the State,
to take care of its own problem, based on an all-inclusive system.
from which neither agricultural workers, domestic workers, nor any
groups are excluded, essentially a dole based on proof of need of the
individual; and that has been in operation since 1936. The result
gives us some impression of the magnitude of this problem. Forty-
two States have been receiving aid. The number of recipients aided
is 1,196,000, and it has cost the States and Federal Government
$22,000,000 for the month of February 1937. The maximum re­
ceived by any individual is $1 a day, or $30 a month, and the mini­
mum I think is $4.02, of the amounts actually received, $4.02 a month,
in one of the States.
Justice BUTLER. Title I is not involved in the case? [Inaudible to
the reporter.]
Mr. JACKSON. As I said, they are not involved in this case, no,
question is raised about the conditions.
8 ORAL ARGUMENTS

Justice BUTLER. No. The title is not involved in the case.

Mr. JACKSON. Except, as I am pointing out, that it is a part of the
relief program which had to be undertaken by the Federal Govern­
ment, and I am going to point out why it was inadequate and title
II was enacted.
There are found in section 2 provisions relating to a State plan for
old-age assistance. It must be in effect in all political subdivisions of
the State. It must provide for financial participation by the State.
It must provide for the establishment of a single State agency to ad­
minister the plan, provide for granting to any individual, whose claim
for old-age assistance is denied, a fair hearing, and provide such
methods of administration, other than those relating to selection,
tenure of office, and compensation of personnel, as are found by the
board to be necessary for the efficient operation of the plan, and
provide for making report to the Social Security Board.
Justice BUTLER. What is the amount that the State will get, here?
Mr. JACKSON. The amount that the State will get? It will get
one-half of what it expends, not counting anything that it expends
above $30 for any individual, and 5 percent for administrative expense.
Justice BUTLER. The Government contributes 5 percent of its fund
for the administration?
Mr. JACKSON. Yes.
Justice BUTLER. That goes to the State?
Mr. JACKSON. That goes to the State. That sum contributed by
the Federal Government is shown by the table on page 74 of the
appendix to be a very much smaller proportion of the total money
expended than that contributed by the Federal Government under
the general relief system. For the latter purpose the States were
contributing very much less than 50 percent.
Justice BUTLER. * * * conditions imposed by*** [in­
audible to the reporter].
Mr. JACKSON. No.
Justice BUTLER. Does it empower the Federal Board to make any
rules or regulations governing the use by the State to which the
Government proposes to contribute under title I?
Mr. JACKSON. The conditions which you are speaking of are per­
haps the conditions for the credit under the unemployment title
and there is no credit system set up in this act at all. The State old­
age-assistance plans must have in them the provisions contained in
section 2.
Justice BUTLER. Referring to page 3 of your appendix, subdivision
(b) of section 2, will you explain that for me? I do not quite follow
that.
Mr. JACKSON. On page 3, subparagraph (b), under title I?
Justice BUTLER. Yes.
Mr. JACKSON. That requires the Board to approve any. plan speci­
fied, except it shall not approve any plan which requires an age
requirement of more than 65 years, except that it may be 70 up to
1940. In other words, the old-age money sent them is to be expended
on persons 65 or upward after 1940, but it may be limited to 70 or
upward previous to that time.
Any residence requirement which excludes any resident of the-State who has
resided therein five years during the nine years immediately preceding the appli­
cation for old-age assistance and has resided therein continuously for one year
immediately preceding the application.
 ORAL ARGUMENTS 9
Justice BUTLER. IS there any specific grant of authority to the
Board, in respect of relief to be furnished by this title, in any other
part of the title?
Mr.. JACKSON. No.
Justice BUTLER. IS this the only authorization, and that to be
implied from this subdivision (b)?
Mr. JACKSON. Of course, if -the State plan departs from the require­
ments laid down, the board may give the State notice, as provided in.
section 4, and after proof that it has failed to comply with the provi­
sions, the board may notify it that it will receive no further money.
Justice BUTLER. What I want to get at is the full extent of the power
of the Board in respect to the matters covered by this title.
Mr. JACKSON. Purely a conditional grant, and the board has a right
to ascertain if the conditions specified are being complied with.
Justice BUTLER. And those are the seven conditions in section 2~
[a]?
Mr. JACKSON. That is right.
Justice BUTLER. And the three conditions in section (b)? Those 10
conditions are all the conditions that may be brought forward in
respect to this relief?
Mr. JACKSON. That sets up the entire system, in respect of grants
in aid to the States. That title -is not involved in this case, and its
validity is not challenged, but it was determined that that title and
that system of taking care of the old-age problem, as it presented itself
in this country was. not adequate and could not be depended upon, as a.
long-range policy; that the old-age problem as it presented itself
required some further and more scientific treatment. Various alterna­
tives were considered by Congress and rejected. The flat pension
based on age alone, with different suggestions as to the age and differ­
ent suggestions as to the amount, ranging from the Townsend Plan of
$200 a month to much more moderate suggestions were considered.
That alternative was rejected. Unconditional subsidies to the States
were advocated and rejected. An alternative was adopted and em­
bodied in title II.
The system embodied in titl~e II1, which is under attack here, is a
system .by which old-age benefits,, as a permanent long-range policy of
the United States, shall be paid to persons reaching 65 and upward, but
that those benefits shall be measured by the wages earned, by the per­
son who receives the benefit, counting. wages only up to $3,000 per
year. The benefits which one may hope to receive will be conditioned
upon the contribution which he makes to society, and the payments are
an incentive to thrift rather than a discouragement to it. It was also
considered that if benefits were keyed to wages earned, there would be
something of a check upon the demands which might be made ag to
amounts of pensions, and that the method in which benefits were made
dependent upon wages earned would fit the benefits somewhat to the
circumstances of life of the beneficiary, because presumably his way
of living would be fixed by the wages he had been in the habit of receiv­
ing; and his benefit would be fixed upon the same basis.
It was further considered that the means test, by which an individual
in order to receive aid under the title I must prove his dependency,
was a humiliating condition, which has had to be abandoned mn many
places where it has been tried. Also the means test was found to be
a distinct incentive to arriving at 65 without any property, because
10 ORAL ARGUMENTS

the person who arrived at 65 with no property began to get benefits,

and the person who had a little property didn't, until it was exhausted,
and the effect of the means test as a social proposition has been found
to be demoralizing.
Then, too, the difficulty with title I from a fiscal point of view was
that the demands upon the Treasury were in no way financed, and
that a system might be set up under which the wages which were
earned could be a measure of one's contribution to the Federal Treas­
ury, as well as a measure of the benefits which be would receive. And
for that reason Congress moved in the direction of a system of benefits
keyed to wages, rather than to need.
Title 1I, section 201 (a), provides:
There is hereby created an account in the Treasury of the United States to be
known as the "Old-Age Reserve Account" hereinafter in this title called the
"laccount". There is hereby authorized to be appropriated to the account for
each fiscal year, beginning with the fiscal year ending June 30, 1937, an amount
sufficient as an annual premium to provide for the payments required under thig
title, such amount to be determined on a reserve basis in accordance with accepted
actuarial principles, and based upon such tables of mortality as the Secretary of
the Treasury shall from time to time adopt.
The next, subsection (b), provides for the investment of this fund,
-while it is in the Treasury.
That provision, creating the old-age reserve account, and making
appropriations to it from year to year, not measured by any tax
received but measured by the reserve requirements computed actu­
arially, is the subject of great controversy. I do not think that con­
troversy concerns us in this case. 'Whether the Congress, if it were
going to establish a system of old~age benefits, should'do it on a pay-
as-you.-go system, by which each year contributed just the amount
necessary to that year's benefits, or whether it should proceed to
accumulate reserves to meet the increasing liabilities, if the benefits
may be considered such, is a question for the Congress to determine.
It is not a legal question, but it is fully treated on page 144 of our
appendix, so that the reserve system can be examined, insofar as the
Court desires to examine it.
I would point out, however, that this reserve system is at all times
in the control of the Congress. It can at any time change the amount
of contribution to that reserve, or the basis upon which that contribu­
tion shall be made. There is no appropriation contained in this title,
but only an authorization of an appropriation, which amounts to no
more than a declaration of policy as to the future. The investment
genlerally is to be in Government bonds and obligations of the
Oovernment.
S~ection 202 sets up the system of benefits, and it provides (p. 8)
"Every qualified individual"-as defined in section 210-and we find
that a "qualified individual" is one 65 years or upward; one who has
earned wages in excess of $2,000 or more after December 31, 1936, and
before reaching 65; one who has worked at least 5 days in separate
Tears between 1936 and the time he became 65. Need, dependency,
inadigency-none of those things are tests in determining whether he
is qualified.
Every qualified individual shall be entitled to receive with respect to the period
beginning on the date he-attains the age of 65, or on January 1, 1942, whichever
is the later, and ending on the date of his death, an old-age benefit as*
follows.
 ORAL ARGUMENTS 11

Then follows a computation, or rather a rule for computation based

on the wages which he has earned. For example, if one earned for
5 years an average of $25 a week, he would not be entitled to any
old-age benefit, because he would not have earned over $2,000, and
the law deemed that monthly benefits based on earnings so small as
that would cost too much to administer, but he would receive back
a lump-sum payment of $52.50 when he reached 65, and was not
qualified to receive benefits.
If one earned $10 a month as an average for 5 years before he
became 65, his monthly benefit would be $17.50. The maximum
that one may, under any circumstances receive as a monthly benefit
under this act is $85 per month, and in order to receive $85 per month
he must have had average earnings of $250 per month over 45 years
of employment. A table in our brief shows just what the accumula­
tions based on average monthly salaries would amount to, and the
amount of benefits.
Justice BUTLER. The term "qualified individual" is defined in sub­
division (c) of section 210. Would that include agricultural laborers,
and so on?
Mr. JACKSON. No.
Justice BUTLER. The benefits of this title do not extend to the classes
you referred to, the seven classes in subdivision (b)?
Mr. JACKSON. The benefits of this title do not extend to any of
those classes, and the taxes which are levied under title VIII do not
extend to them either. Those employments are not affected by either
the appropriating or the taxing titles of the act, for reasons which we
explained in connection with the unemployment insurance, and which
I will not take the time to repeat-the difference in the types of work.
Justice BUTLER. Has there been any research to indicate the rela­
tive number of the qualified individuals, or the percentage? How
would the numbers compare with the agricultural laborers, domestic
service employees, and so forth, the seven classes? How w;ould that
compare with those who get the benefits? Is there any knowledge
on that score yet?
Mr. JACKSON. I think there is. There are estimates. I do not
have them in mind, but I will get them for you. Some 26,000,000
people at the present time are affected by the taxing titles.
Justice BUTLER. There are 26,000,000 taxed, and the qualified in­
dividuals would be included in that 26,000,000?
Mr. JACKSON. All of the 26,000,000 are in the process of qualifying.
Justice BUTLER. That is what I mean.
Mr. JACKSON. Yes.
Justice BUTLER. But the number of agricultural employees, domes­
tic service, and so on, you do not have that?
Mr. JACKSON. We have it, but I do not have it in mind. We have
estimates on it.
There is a limitation of $85 per month on the amount of benefits
which may be received, and any qualified individual who receives
wages with respect to employment after he attains the age of 65
receives no benefit for the months during which he was employed.
Then there are certain payments made upon death, under section
203.
If any individual dies before attaining the age of 65, there shall be paid to his
estate an amount equal to 3.5 percenturn of the total wages determined by the
board to have been paid to him, with respect to employment after December 31,
1936.
12 ORAL ARGUMENTS
So that in the event of death before he qualifies, a death benefit is
paid to his estate.
Another type of payment is provided by section 204 [p. 101:
There shall be paid in a lump sum to any individual who, upon attaining the
age of 65, is not a qualified individual, an amount equal to 3.5 percentum of the
total wages determined by the board to have been paid to him, with respect to
employment after December 31, 1936, and before he attained the age of 65.
So there are, roughly, three kinds of benefits: A benefit paid monthly
after reaching the age of 65, provided he is qualified; a death benefit
paid to the estate, if he fails to reach the age of 65, based on 3.5 percent
of his wages; and, if he reaches 65 and does not qualify, because of his
failure to earn sufficient wages during the period to entitle him to an
annuity, then he receives a flump-sumn payment.
Justice BUTLER. In the case of those who are needy, they would
have the dole, based on title I? They would have relief under both?
[Indistinct to the reporter.]
Mr. JACKSON. Title I takes care of those who are not reached under
this title, and it would also take ca re of, or would authorize the exten­
sion of assistance to, a person who was receiving a benefit under this
title, if the benefit was not sufficient to enable him to live. Title I is'
applied to the extreme situation of need from whatever cause arising.
This is a system by which, through calculation of his earnings, he
becomes entitled to a benefit, based on his wages. Now, that, with
the definitional title which Your Honor has already called attention
to, excluding agricultural labor, domestic service, and 'casual labor,
employees on vessels, political divisions of the State, and of the
United States, completes the expenditure title, title II.
This plan of expenditure is complete in itself. It does not depend
on the amount of tax that is raised. It does not have any reference
to the taxes, in fixing the amounts, or the time benefits shall begin.
In fact, it does not begin until 1942, so far as the monthly payments
are concerned, while the tax begins this year. It is not in any way
dependent upon the amount of taxes raised. There is no interde­
pendence.
The CHIEF' JUSTICE. This entire scheme could be abolished by
Con rSs without affecting the taxing provision?
Mr. JACKSON. It could. And the entire taxing scheme could be
abolished, without affecting this provision. All that you would need
to do would be to keep your wage records for the benefit title. Both
benefits and taxes require reference to the amount of wages earned
for their computation, but by the keeping of the records this title can
exist alone. It does not depend in any way upon the operation of a
tax, in the sense that the Agricultural Adjustment Act depended, as
Your Honors found in the Butler case.
There would have been many other methods by which this could
have been financed. I cite some merely to show that the benefits are,
independent of the taxing provision. It could have been financed by
borrowing. There was no need of the tax in connection with the
expenditure title. It could be financed by printing the money, if
Congress were so disposed. It could be financed from higher income
taxes, as a very respectiable school of thought advocates that it should
be. It could be financed by a sales tax, or a tax on employees alone,
or on employers alone. But Congress, anticipating that these appro­
priations to this reserve Account would occasion a substantial drain
 ORAL ARGUMENTS 13
6ipon the Treasury, sought additional sources of revenue with which to
protect the Budget, and it decided upon a tax on employees' earnings;
a tax by which the employee during his productive years would pay
to the Treasury of the United States a proportion of his earningsr n
a tax on employers, based on the employment-and this is no t1iied
to eight or more, so that the employer who had the benefit of that
man's services during his productive years would also be contributing
to the Treasury during that time.
This tax scheme is set up in title VIII, found on page 37 of our
appendix, and it is a very simple taxing measure. The first, section
801, is an income tax on employees:
In addition to other taxes, there shall be levied, collected, and paid upon the
income of every individual a tax equal to the following percentages of the wages
* * * received by him after December 31, 1936, with respect to employ­
ment * * *.
Now "wages" is limited by definition, and "employment" is limited
by definition. The definition of "emplo ment" excludes agricultural
labor, casuals, domestic service, and so f~orth, and "wages"i limited
to that amount which is paid, under $3,000; that is to say, $3,00Qi
from any one employer.
Sect-ion 802 makes this employee tax the obligation of the employer
to withhold and pay over to the Treasury, and indemnifies the em-.
ployer if he does so. That tax has been held bad in this case. We
contend it could not be challenged by the stockholder of a corporation',
since it in nowise and under no circumstances could operate to affect
his equity. The circuit court of appeals held it bad because they
held that this tax would not have been enacted alone, and that it was
"capricious" in that all persons should be entitled to benefits under an
old-age plan, and not merely the groups which are included. We
contend that even if this were to be reviewed, it is a valid tax, under
the silver tax decision which this Court handed down at this term
(United States v. Hudson, No. 97, decided Jan. 11, 1937). It is an
additional tax on income, additional to any other income tax which
the employee might have to pay. Then 804 lays the tax on the
employers:
In addition to other taxes, every employer shall pay an excise tax, with respect
to having -individuals in his employ, equal to the following percentages of the
wages**
These percentages start at 1 percent for the first 3 years, and increase
one-half of 1 percent each 3 years until they reach a maxim um, of
3 percent.
Under section 807, the taxes imposed by this title shall be collected
by the Bureau of Internal Revenue under the direction of the Secretary
of the Treasury, and shall be paid into the Treasury of. the United
States as internal-revenue collections. There are no provisions in this
act which limit the use to which this fund so collected shall be put, or
which appropriates it either in part or in its entirety to any particular
use.
As a matter of fact, this tax is being collected under the regulations
by returns filied by the employers, and as I have said, 26,000,000
persons are paying the -employees' tax, and 2,500,000 are paying the
employers' tax, making the widest taxing base that has ever been

S. Doc. 71, 75-i---­

14 ORAL ARGUMENTS

established in this country, producing at the rate of approximately

a half a billion dollars in revenue per year.
Justice BUTLER. How many employers did you say?
Mr. JACKSON. Ovor 2,500,000.
This tax, as a tax, has been held bad. The circuit court of appeals
wrote an opinion in the Boston & Maine case, which is found in our
appendix at page 89. It accompanied the opinion in this case, and it
explains at greater length their view of these taxes, although they
were there dealing with the unemployment titles. The circuit court
of appeals said, in reference to the other tax, but referred to in its
opinion as amplifying the reasons given in the case. at bar:
Is the tax imposed on employers under section 901 of title IX an excise tax
within the meaning of section 8 of article I of the Federal Constitution? If it is
not, it is not a tax that Congress is authorized to levy.
It seems to us that this indicates a very substantial departure from
the Constitution, in that there is equal power to levy taxes, duties,
and imposts, along with excises, and that whether this be an excise,
or whether it be denominated by some other name, does not affect its
validity. The Court then proceeds to say
Justice SUTHERLAND. I suppose that provision of the Constitution
is intended to include all forms of indirect taxation.
Mr. JACKSON. That is our view, and there is no holding that this is a
direct tax. Says the Court:
At the time of the adoption of the Constitution the term "excise tax" was used
only in connection with a tax on goods, merchandise, and commodities.
And the Court follows its reasoning by pointing out that the Mas­
sachusetts Constitution provides only for excise taxes on produce,
goods, wares, merchandise, and commodities. It concludes:
While the Federal Constitution does not contain the word "commodities" as a
basis for levying excise taxes, there appears to be little, if any, difference in the
limits imposed upon the interpretation of section VIII of article I by the Supreme
Court of the United States and the interpretation placed on the constitutional
provision of Massachusetts by the Massachusetts Supreme Court.
In other words, it seems to us that they have read into our Consti­
tution the limitations of the Massachusetts Constitution upon excise
taxes.
Justice STONE. Did they say that it could not be any other form of
tax or impost if it were not an excise? I
Mr. JACKSON. That is the inference that I draw from their opinion.
They treat it as an excise, find that it is not an excise, and conclude
that because it is not an excise it is not valid.
There are historical reasons why "excise" as used in the Federal
Constitution is not to be limited as it is in the Massachusetts Con­
stitution. In the first place, the Massachusetts Constitution limits
it to commodities and merchandise, by its own terms. In the second
place, our system of excises did not arise in Massachusetts but in
New York.
Seligman's Essays on Taxation point out that the excise taxes
came to this country from the Dutch, that they were not developed
in the English system of taxes, but the English got them from the
Dutch, and he points out that Massachusetts had a system of taxation
based largely upon direct taxes, and that, in New York [reading,:
Accordingly, there was9 no system of poll and property taxes as in New England,
and no system of indirect taxes on exports and imports as in Virginia. The
 ORAL ARGUMENTS 15
fundamental characteristics of this system was the introduction of the excise
system or indirect taxation of trade ,which was borrowed from Holland, just as
we find the excise system introduced from Holland into England and the other
European countries during the seventeenth century. Each section, therefore,
had a fiscal system more or less in harmony with its economic conditions. It was
not until these conditions changed during the eighteenth century that the fiscal
systems began somewhat to approach each other * *.
That undoubtedly is why we find, in an instrumnent that is not given
to using synonyms, that "taxes, duties, imposts, and excises" are all
specifically enumerated, in order to make certain that the system of
each of the Colonies was included.
The argument that this tax cannot be laid because the employment
of labor is a "natural right", is one which I shall not pursue, because
I do not think it is important in a constitutional sense. Whether the
source of the right is "natural" does not seem to affect its taxability
so- far as I can find in our constitutional law. If the right to employ
labor is a natural right, it would seem that earnings from that work
would be also a natural right, although we know that they have been
taxed for some time. It would seem that the right to make gifts or
to make sales or to process materials which were owned would bhe as
"9natural" as the right to employ labor.
We contend that the right to tap the labor supply of the United
States is a taxable right, whether it originates in some theory of natural
law or whether it be considered a privilege. The source of the right
is not important so far as the right to tax is concerned. We know tat
there is no source of wealth more productive today than the exploita­
tion of other men's labor. We know that it is a s~ource of trouble and
expense to the Government, and I do not need to enlarge upon it, in
view of the recent cases which this Court has had, involving those
questions. We know that the economic effect on the worker is some­
thing that society has a right to consider, under the minimumn-wage
decisions. We know that the effect on society of employers who call
labor, by offers of wages, from one locality to another, who build up
employment in the city by drawing men from the country, and who
move them about from place to place by various inducements, creates
a social problem. It is unthinkable, that this privilege, right, or
whatever it may be held to be, so exercised in this day, would b~e
exempt from taxation.
If it be exempt from taxation under the Federal Constitution, then
there is an unsuspected and a metaphysical limitation on the, taxing
clause that has taken 150 years to discover. So we submit that this
tax,.as a tax, is valid.
I shall not go into the question of due process-that has been
argued before this Court very recently-except to point out that thins
tax is not appropriated to any specific end, nor is it earmarked, that
there is no equivalence between tax and expenditure. On the other.
hand, the very fact that it is necessary to create a reserve in the
Treasury shows that there. is not an equivalence between the receipts
in any particular period and the expenditures for that period, except
there may be-we hope there will be-over a long period of time a,
rough equivalence between revenue and expenditures. This tax
produces more revenue than any tax that this Court has been called
upon to consider in a long time, and has a broader base. All of these
considerations argue for the validity under the due process clause.
Whether this benefit title II can be considered at all upon the
challenge of any taxpayer or its stockholder, is also raised and briefed.
16 ORAL ARGUMENTS

We think that no taxpayer, whether it be in a refund case or in this

case, or in any other case, can reach back of the taxing title of this act
and bring into question the expenditures for old-age pensions which
Congress has seen fit to establish, because there is no necessary
connection or interdependence between the two titles of the act. If
he can, then every tax which is laid to meet anticipated drains upon
the Treasury, may be challenged, if any one of the appropriations
there may be found to be questionable.
It is contended in the light of the peculiar character of this tax and
its entire separability from the purposes of title II, that the circuit
court of appeals, in holding that they must pass upon title II in order
to determine the validity of title VIII as to taxes, was in error, and
that this taxing title can stand by itself, as a system of taxes for the
Treasury, to produce revenues that are badly needed if there were no
old-age system, and that are worse needed if there be an old-age
system, and that the consideration of title II in this case is error.
Considering the tax upon its own merit, it is our contention that
it is a valid excise tax laid upon the right to employ labor in certain
employments which are not excluded by definition, and that that
tax does not offend the due process clause of the Constitution.
There remains the question as to whether the old-age benefits in
title II serve the general welfare, if it is to be reviewed by this Court.
We face a consideration of the question whether, and to what
extent, appropriations made by the Congress are subject to judicial
review. The court below has reviewed this expenditure, has held
that these expenditures would not serve the general welfare but would
serve a* purely "local" purpose; and that has been the basis upon
which these taxes have been held to be unconstitutionally laid.
It is clear that a tax to pay the debts of the United States does
not present a reviewable question, because the court has held that it
is woily within the discretion of Congress to recognize as debts such
claims as it will, even though they may not be based upon lawful
obligations. Certainly there will be no review of the question as to
what appropriations are necessary to the common defense. It seems
to us -that the same limitation applies to the general welfare, that
unless the tax and an expenditure be so interwoven that one becomes
a part of the other, as in the Butler case that tax was held to be,
there is no room for judicial review. The right of review is presented
in this case because these benefits are in thle -nature of pensions or
gratuities. There is no contract created by which any person becomes
entitled as a matter of right to sue the United States or to maintain
a claim for any particular sum of money. Not only is there no con­
tract implied but it is expressly negatived, because it is provided
in the act, section 1104, that it may be repealed, altered, or amended
in any of its provisions at any tune. This Court has held that a
pension granted by the Government is a matter of bounty, that the
pensioner has no legal right to his pension, and that they may be
given, withheld, distributed, or recalled at the'discretion of Congress.
We therefore feel that title II, which sets up in this country a system
of old-age pensions is not to be reviewed, that it presents a political
question as to the general welfare rather than a legal or constitutional
question, and that if there be an abuse in the pensioning system,
it is a matter to be dealt with politically rather than judicially.
 ORAL ARGUMENTS 17
But, if there be a review, it must, under the Butler case (297 U.S. 1),
appear that by "no reasonable possibility" can these expenditures
contribute to the general welfare, and I do not know how we shall
determine it in this case, because, even though you might hold that
"the meaning of the Constitution does not change, with the ebb and
flow of economic events", to quote from Mr. Justice Sutherland, that
certainly cannot apply to subjects affecting the general welfare, for
the very words themselves are of flexible content. They do not
embody fixed legal concepts which can carry from generation to gener­
ation without change. Here we have evidence taken by Congress.'
Over 3 weeks the Ways and Means Committee called witnesses as to
all phases of these problems, the Finance Committee for another
3 weeks, and there is offered to this Court in this case no evidence
whatever to overcome the evidence taken by Congress, and on which
it based its conclusion that old-age benefits would be for the general
welfare.
If we are to review in a judicial proceeding these appropriations, it
seems to me we must do one of these four things: We must either dis­
regard the evidence taken by Congress, upon the ground that it is
irrelevant to 'a judicial inquiry or we must overrule it upon the
ground that we judicially know other things to which Congress did
not give sufficient weight, or we must weigh it as to its sufficiency to
sustain the conclusion that the general welfare would be served by
these appropriations, or we must test it by the "some evidence rule",
as to whether it is sustained by an evidence, or we must test it by
the "no reasonable possibility" rule laid down in the Butler case.
The very difficulties of considering this question of general welfare in
this state of the evidence adds weight to the argument that it is not a
judicial question.
But if we are to review in this Court the question whether Congress
has served the general welfare in fact, I am frank to admit that we
face a tradition of 150 years of practice that is against the making of
old-age relief a matter of national welfare. But I would call your
attention to the fact that old-age welfare has been a constantly widen­
ing concern. The matter of -the care of the old was at one time a
matter for the family only. It became gradually a matter for the
town poormaster if the family failed. From, the town poormaster
it became a matter for the county with its poorhouse, and then the
State, because of failures of counties, intervened, and now we argue
that it has become a matter of national welfare.
The uncontradicted evidence shows that there are developments in
the matter of the old-age problem which differentiate that problem'
as it exists today from the problem as it existed in the past. In 1870
out of a population of 38,000,000 we had 1,153,000 or less than 3 per­
cent of our people 65 and over. That proportion had more than
doubled by 1936, and out of 128,000,000 we had 7,700,000, or 6 per­
cent of the population that had reached 65; Experts projecting
these trends indicate that in 1980, out of a projected population of
158,000,000, we will have 22,000,000 aged or 14 percent who will
have reached 65. Table 3 shows that there is a proportionate increase
in the older' brackets involving ages less than 65.' It seems that
science is extending life, but that science is not stimulating the birth
rate.
 18 ORAL ARGUMENTS
We find that parallel with this growth in the number and propor­
tion of aged, there is a shortening of the economic life of each, that
the employable years are more limited. The studies set forth in our
brief show that in 1929 in the State of New York a study was made and
28 percent of the manufacturing plants had a limit on the years of
those that they would employ. Commonly the limit was 45 years.
In 1930, 224 factories were studied.
Justice BUTLER. Is that the limit of taking them on, or the limit
of letting them out?
*Mr. JACKSON. The limit of taking on.
Justice BUTLER. And the letting out?
Mr. JACKSON. On the letting out there has been no fixed limit
ascertained. A man who has a job is commonly kept on, sometimes
long after 45, but if he loses his position, or if that plant closes, or if
his skill becomes obsolete because of some improvement
Justice BUTLER. I just wanted to understand what particular
limit you meant.
Mr. JACKSON. When he is forced by any of those hazards to seek a
new position, 45 years of age places a handicap upon him.
Justice STONE. Is there anything to show what the effect of unem­
ployment in recent years has been upon the increase of unemployables,
because they had reached the age of 45 during the period of unem­
ployment?
Mr. JACKSON. I do not recall anything that is definite and in
statistical form on that subject, Your Honor, but we have found that
outside of those that had fixed limits, 153 factories that had no fixed
limits, as a matter of rule made it a practice to hire but few men past
50.
Now this means a great deal on this old-age problem. If we
assume, as the mortality tables tell us, that at 65 years of age a man
has an expectancy. of 12 years and a woman of 13 years, the shortening
of employable years during which one can make provision for taking
care of age makes a radical alteration in the old-age problem. That
is to say, if a man has 40 years of employable life to provide for 10
years of old age, that is one problem. If he has only 20 years of
employable life to prepare for 10 years in old age you have doubled
the burden upon his productive years.
Justice STONE. Do your figures here dealing with the age at which
one ceases to be employable deal with men who have not learned a
particular trade? Isn't it much lower than 45? That is to say, if a
man knows a trade, he may get employment up to 45. Suppose he
has not learned a trade. How late can he get into it? Are there any
statistics shown here?
Mr. .JACKSON. I couldn't answer that, because these tables are not
classified by occupations, and whether there is such information avail­
able I do not know.
Justice STONE. I was under the impression it was much lower,
where a man had been out of employment and had not learned a trade.
Mr. JACKSON. An exceedingly skilled man may be unable to obtain
employment if there has been technological improvement which makes
his skill obsolete. My attention is called to this note in the brief
[reading]:
The age when hiring handicap begins for males is 35 years; and females-, 30
years. The chances of an unemployed person of 40 years and over obtaining
employment are only about 19 percent as good as those of a person under 20 years
of age.
 ORAL ARGUMENTS 19
Justice STONE. On what page is that?
Mr. JACKSON. That isp.age 58, but it does not classify by occupa,..
tions.
The present ratio of dependency of the aged is summed up by the
Social Security Board by saying that almost three out of four persons
65 years of age or over were dependent wholly or partly on others for
support. This losing struggle which the aged are fighting in the eco­
nomic world becomes a matter of no mystery when we look at the.
wage commonly paid, which has been discussed in the $t'eward case,
dealing with unemployment compensation, and I will, not repeat it.
Among the hazards that, fall upon men are periods of unemployment,
and in that respect I would call Your Honors' attention to the fact
that even if you shall find that the unemployment system attempte4
in this country may work, it still does not relieve the worker of bearing
the major part of the burden of unemployment. He gets a few weeks
of benefit, a part of his wages. He has to wait a couple of weeks
usu ally to get it, and after that short period when compensation is paid
the burden~is all his own. The system'is.not., and cannot at.the pr~esent
time, be made sufficiently extensive but that the worker must bear the
major part of the burden of unemployment.
The movement to the city is another factor which has made the .old­
age problem serious. .We all know that on the farm' where living
requirements are not mainly in cash, and where one has access to his
own means of production, old age means doing the same job but
doing it slower, and the pace may be set by the worker. Perhaps a
steady man and maturity of judgment would be .an asset there, but
in modern industry pace has taken the place of. all other requirements,
and the requirements of speeding up and efficiency operate against
the man of years.
The failure of private pension plans is explored by the evidence,
and pointed out in our brief. The failure of private c~harity to meet
this problem is conclusively shown by the figures of the .Burau of
Internal Revenue. In 1928 the persons with $300,000:and up of in­
come contributed an average of $25,400 to purposes -for which they
were entitled to the charitable deduction. By 1931 they had re­
duced those contributions, the same group, to'$12,900 average, show-
ding that the well-to-do retrenched in their charitable contributions
during the period of depression, although the need was greater.
The resources of the States have been cdeclining. Real. estate re­
served, to 'the States as a source of taxation has been taxed, to the
limit of its capacity to bear, and personalty has never been success­
fully taxed locally. The Federal Government, which is able to tax
incomes and to lay excises, has sources of revenue which have been
drying up for the States, not because of any change in the legal system
but because the economic emphasis on personal property has left the
States without acomparativesource of revenue such as they had at the
beginning of our constitutional system.
Congress therefore came to the conclusion that the general welfare
of the United States would be served by abandoning the system under
which age looked forward to a road that led over the hills' to the
poorhouse. It came to the conclusion that poverty inage is no longer
a moral judgment against the individual; that if the time has been iiA
our economy when we could say that it was only indolence and
prodigality that led one to the poorhouse, that time was no longeri
20 ORAL ARGUMENTS
and that if a poverty-stricken age was the judgment of a wasted life
at one time in our history, it is not so today.
The lesson of the depression broke that tradition. The condition
which is promised as an implication of our system, that thrift would
be followed by plenty, failed in the depression, for the man who had
responded to the inducements and had accumulated a bank account
and selected the wrong bank, or the man who had saved to purchase
a home, found himself in the same position as the one who had never
saved at all. In fact, the man who had not tried to acquire a home
perhaps was better off because he was not faced with a deficiency
judgment. The unfortunate consequences of this depression bring
home to us the fact that self-denial had not assured comfortable age,
and this old-age-pension system was set up in the hope that it would
make true the promise to men that if they were thrifty and industrious
and self-disciplined their age would be spared at least extreme poverty.
This plan does no more than spare extreme poverty, and may not in
many instances do that. -This plan was that if the workman during
his productive years would contribute to the Treasury of the United
States, then the Treasury of the United States in his unproductive
years would contribute to his necessities.
We submit that there is nothing unconstitutional in this exercise of
the power to tax and the power to appropriate. If this tax and this
appropriation does have the effect of relieving the State of some of
its burdens, that is not in itself unconstitutional.
One of the first acts of our Federal Government was to relieve the
States of their burdens by assumption of their debts. The Consti­
tution does not prohibit the assumption by the United States of
obligations which a changing condition may make necessary for the
general welfare.
No right of the State is invaded here. No regulation is imposed-
by this title except a tax. No right of 'the State to handle its poor
problem in any, way it chooses is interfered with. It may maintain
its poorhouse, if it considers that to be one of its rights. It may take
care of its poor beyond the provision made by the Federal Govern­
ment. It may solve its problem in any manner its own local interests
may require,, but the Government pays into- the hands of its aged
citizens certain sums based on their contributions to the production
of the country during their productive years, and that cannot be said
to be an interference with the rights of the State, any more than a
pension to a veteran is an interference with the right of a Sta te of
which he is also a citizen.
This Court has announced, through Mr. Justice Sutherland, in
Floridav. Mellon (273 U. S. 12) and in Massachusetts v. Mellon (262
U. S. 447), the doctrine that the taxpayer is a citizen of the United
States as well as of the State, and that the performance of his duties
as a taxpayer to the United States can never be said to be an inter­
ference with the right of the State to exact its duties likewise owed to
the State. By the same 'doctrine, the discharge by the Federal
Governmnent of its duties to its citizens, where there is no inter­
ference with the right of the State to perform its own functions in
its own way, is not an interference with the rights of the State. There
is no1system here by which anyone is required to execute any con­
tracts submitting to Federal jurisdiction. No contracts are provided
with either State or individual.
 ORAL ARGUMENTS 21
This contributory system by which the productive years of men
take care of their unproductive years is the soundest system in
economics that the country is likely to see. It is not offered even by
its sponsors and advocates as a perfected system, but it is at least
designed to preserve -in our life those virtues which we have been
taught were essential to our system. By the keying of benefits to
wages, there would be something of an automatic check upon the
amounts which might be demanded, and there would be a relation
between the pension and the deserts of the pensioner. The pension
which he received in his old age would be adapted to the style of living
in which he had been able to set himself up by virtue of his own
earnings.
The congressional determination made after long study, made after
considerable experience in dealing with the general problem of relief,
which included relief of the aged, that this system-is for the general
welfare of the United States, seems to us not subject to review. But
if it is to be reviewed, it at least falls within that wide discretion
which is vested in the Congress to make provision for the general
welfare of all of our people. If you review this phase with the most
critical eye, it still meets the challenge, and the evidence here shows
that it is for the general welfare of the United States.
We therefore ask a reversal of the ruling of the circuit court of
appeals, and I would like to reserve the remainder of our time for
reply by Mr. Wyzanski.
ARGUMENT ON BEHALF OF THE RESPONDENT, BY EDWARD
F. McCLENNEN
Mr. MCCLENNEN. May it please the court, the first question in
this case is, whether this is an excise. If it is, not an excise, all the
other questions become unimportant.
The Constitution gave to Congress the power to tax and to levy
excises, imposts, and duties for the common defense, payment of the
debts, and the general welfare of the United States. In this first
question, there is not involved any question whether this is for the
general welfare, or for the common defense, or to pay the debts. It
is simply the question whether it is an excise. It is no other type of
tax.
The Congress elected to have it an excise. They called it an excise,
and if it is not that, it is not a valid levy.
Justice STONE. That is, you say it could not be regarded as a tax,
if it is not an excise?
Mr. MCCLENNEN. It could not be regarded as a tax that was valid,
because the Congress has laid it as an excise.
Justice STONE. Suppose they had called it by the wrong name?
Would we have to call it unconstitutional?
Mr. MCCLENNEN. Not merely by reason of that; but if it is not an
excise, Congress in laying it has laid it in the manner of an excise and
has not apportioned it. If this is some other kind of tax, Congress
has not yet exercised its judgment on how they will lay it.
Justice STONE. That is, you say any tax-other than an excise must
be apportioned. Is that it?
Mr. MCCLENNEN. No. A duty does not have to be apportioned.
An impost does not have to be apportioned, if that is anything different
22. ORAL ARGUMENTS

from a duty, or an excise. But if it is, in your judgment, a tax but

not an excise, Congress has not yet passed upon the question of
whether it will follow the rule of uniformity or will follow the rule of
apportionment, as' required by the Constitution. This much, in
answer to Your Honor.
Justice STONE. I should have supposed we would have approached
it in a somewhat different way, and asked ourselves whether this was
a tax, and whether, if a tax, it is a direct tax; and if we said it was not
a direct tax, that we could then stop without any further inquiry as
to the label we attached to it.
Mr. MCCLENNEN. There is,. as Your Honor puts it, involved the
question whether under the Constitution there is any power to lay
anything that may be called a tax except. a direct tax, or an impost,
excise, or duty. The Court has said mn its past utterances on the
subject that those comprehended all the taxes that were within the
power of the Congress, and the natural interpretation of the Consti­
tution would indicate that to be so, because the Constitution lays
down two methods of laying taxes, one by apportionment and one by
uniformity, and it would seem as if it was the intention of the Consti­
tution to provide one or the other method of determination, in
accordance with which class it fell in, and that there was no kind of
tax that did not fall into one or the other.
(Thereupon, at 2 p. in., a recess was taken until 2:30 p. mn. of the
same day.)
(At 2:30 p. mn. the Court reconvened and the argument was resumed
as follows:)
Justice STOiNE. Mr. McClennen, does your brief deal with the equity
jurisdiction in this case?
Mr. MCCLENNEN. No, Your Honor'; it does not. I have a memo­
randum of authorities available, if the Court desires it.
Justice STONE. If at your convenience you could subnmit them, I
weiild be glad to see them myself. I cannot speak for the others.
The CHIEF JUSTICE. You might print a list of your authorities.
Mr. MCCLENNEN. I have them in print, Your Honor.
Justice BUTLER. The injunction runs against the income tax of
employees, does it?
Mr. MCCLENNEN. If a decree were entered pursuant to the circuit
court of appeals.
Justice BUTLER. The decision here?
Mr. MCCLENmEx. It would enjoin corporations. The Commission­
er is not a party in interest in this litigation. We ask no relief against
him.
Justice BUTLER. Mr. Jackson raised the point more or less definitely.
Mr. MCCLENNEN. I deal with that question as to the substance.
That is, I later will ask Your Honor-
Justice BUTLER. I did not mean to interrupt you.
Mr. MCCLENNEN. As well now as any time. We are at odds as to
whether a tax is imposed on employees, but we say that we have a
right to ba heard as to whether we shalIl pay over to the United States
some money of our own-and it is our own; it never goes to the em­
ployees and comes back. It is never segregated to him in any way.
We pay; we give our check to the United States, under 802, and then
we haven't the money. The statute says that we may deduct it in
paying the employee and pay him only 97 percent. But the statute
 ORAL ARGUMENTS 23
being by the premises unconstitutional, we cannot deduct it. And
we are open to suit by him, and under the laws of the Commonwealth
from which I come, if we do not pay that 3 percent of the wages we
may be summoned into the police court for nonpayment of weekly
wages when due, and of course if the act is unconstitutional, we have
no answer to that criminal prosecution.
So that I submit that there should be no question but we have a
standing to be heard on the question of whether the order to us not
to pay our employees what we owe them but to pay it over to the
United States instead is a constitutional act.I
In view of Your Honor's inquiry about the jurisdiction, may I say
this: I submit that there is no fundamental lack of jurisdiction here.
We have brought a proceeding, an irregular proceeding, if you please,
in which we ask a court for some relief. It is a court of general juris­
diction, and there are known to the common-law ways by which the
relief can eventually be obtained. We could have gone into a court
of equity and asked permission to'compel the corporation to file a
refund claim-they paid the tax-and the result would have been
arrived at in exactly the same way and the question up would have
been just the question that is here presented. .That is all waivable.
Furthermore, we are here reluctantly, in a sense, because we have
been summoned here by a writ of certiorari that bounds the questions
that we are called upon to respond to, I submit, and we were asked to
come here to demonstrate the question of constitutionality which is
presented in the petition; no question of propriety of procedure is
presented.
Aga-in, the decree of the district court of the United States dealt
with the merits of this question. Had we rested there, it would have
been established as to us that this act was constitutional,, that we
could never complain of this treatment of this money. They dealt
with the merits, and we appealed. The only ground on which we
appealed was that the act was unconstitutional. That was the-:only
error that we assigned. Our adversaries did not appeal from the fact
that the district court had exercised jurisdiction to decide this ques­
tion. They -could not be heard above. The only thing that could be
heard above was our appeal.
Justice CARDOZO. I suppose your position is that so far as any
substantive right of the corporation is concerned the corporation by
not appealing or petitioning for the certiorari has abandoned or
waived that, and that there remains then only the question of ade­
quate remedy at law which may in certain circufnstances be waived or
disregarded!
Mr. McCLENNEN. Yes; that apart from the procedural obstacles
in the way of employees raising any of these other questions in this
appeal here, in this petition for certiorari here, everybody in sight
except the Court has waived this question, and I submit that they
have a right to waive it.
I might say one word more. There is no preliminary injunction
here. None ever will be issued. There will be only a final injunc­
tion. The judicial power of this Nation is in this Court. They are
a Court of equity. If finally it is determined that this is not a tax, if
the section of the statute referred to prohibits this Court from issuing
then an injunction, not against the collection of a tax, but against
the collection of something which is not a tax, it would be unconstitu.­
24 ORAL ARGUMENTS

tional. This Court cannot have its powers taken from it in that way,
when the substance of judgment in a court of equity and final relief
enables the Court to issue an injunction. And of course the statute
never was intended to cover a case where, before the injunction ever
was issued, the Court of last resort had reached the conclusion that
there was not any tax. It would not be applicable in terms under
those circumstances.
Now, I would like to answer further Your Honor's earlier question
on the matter of tax. What I referred to was what was said in Flint
v. Stone-Tracy Co. (220 U. S. 107, 151):
Although there have been from time to time intimiations that there might be
some tax which was not a direct tax nor included under the words "duties, imposts,
and excises", such a tax for more than 100 years of national existence has as yet
remained undiscovered, notwithstanding the stress of particular circumstances
has invited thorough investigation into sources of revenue.
Of course, that does not absolutely say that there is no other, but
it is pregnant with that suggestion, and I submit that if you look at
the Constitution when you consider what was sought. to be accom­
plished here, here were 13 sovereigns surrendering some of their taxing
power to a new soverpign. Of course, if we had been set up as an
unlimited sovereign-I don't mean that there was any limit on its
sovereign powers, but those were in its category of Government, and
if it had been an unlimited sovereign, there would be the inherent
power to tax.
Such was not the case here. All the property, all the persons
against whom taxes could be levied, were in allegiance to another
sovereignty already, and that sovereign had equal powers to take
everything that could be taken.by taxation from them, and the Nation
got only what those 13 sovereigns turned over;- and that was- the right
to tax, and it mentioned these taxes.
Well, now, if those words should be read in the langurage of the times,
in the light of the knowledge of the times, I respectfully submit that
all they were talking about were direct taxes and excises, imposts, and
duties; that that comprehended all of the power that was given.
You know how jealous the States were in giving up these taxing
powers, and it is inconceivable that when they had made this one
careful provision that the direct taxes should be done in this and this
way, and the excises-and I use that in short for the other three-
should be done in this way, it is inconceivable that they would have
left another way of taxation which they did not design, as to whether
that was to be apporlooned among the States as they provide with
respect to these taxes, or was to be made uniform or was to be done
mn some other way. Taxes meant, in the language of that day, direct
taxes; and these others meant these other types.
Now, of course, duties may be laid aside and imposts may be laid
aside, except so far as they are comprehensive of excises and duties;
and the only word that can be used is the word which Congress recog­
nized as the only one that would be applicable if there was any that
was applicable; and they said they laid an excise.
Now, it is a word that must have some definition. There must be
some limits to the taking of property from the citizen by the Govern­
ment under, the name "excise." The definition which we have pro-
Posed is the definition sanctioned by the cases. That is taxation,
direct taxation, was tax upon the property-debatable whether it in­
cluded personal property, but that is immaterial; real property any-'
 ORAL ARGUMENTS 25
way, determined by its static value and irrespective of its use of non­
use; and the excise was also a tax upon property, property in manu­
facture, property in sale, property in trade in any way-but property.
If we go further back, I submit that the word "tax", leaving out of
consideration the capitation tax that is expressly provided for, is based
upon the idea of property in some form. There must be something
to be taxed.
Now, here the difficulty is evident in the language of the section.
Section 804 is on page 8 of our brief. The sections there are not, you
will observe, in order, because they are in the order of their sequence
in consideration in the case. 804: "In addition to other taxes, every
employer shall pay an excise with respect to having individuals in his
employ."
What is the tax on? "With respect to having individuals in his
employ." This was a Congress that had in mind at the time exactly
how you talked when you were discussing a tax on something.
in 801, which is on page 9, the tax is on the income. "In addition
to other taxes, there shall be levied and collected and paid taxes on
income." It was on income. You could tell what they were talking
about and what was being taxed..
What are they taxing in 804? No substance whatever. No indi­
viduals. No taxes levied on an individual. No taxes levied on a piece
of property. And they do go on to give the guide for the measurement
of the tax, but they do not tell what it is on. And it throws a great
deal of light on the difficulties. There was not anything there to be
taxed.
Now, when the word "excise"~ was used in 1788 it had a well-estab­
lished meaning. The excises began in England. I think it was 1643,
and we had them in Massachusetts in 1646, and they ran all the way
down, and they were taxes upon property. A tax upon whisky was
the typical thing. Tax upon tea was another. Tax upon salt. Tax
upon green glass-things of that kind.
In the brief we have asked your consideration of these things,
bearing on the meaning of this word in 1788: The things that had
been called excises, the practical applications, what the word meant
as it appeared in these statutes and ordinances; what the dictionaries
of the day said about it.
Dr. Johnson's dictionary was 20 years old or so before this. I am
speaking now of the vulgar dictionaries, not law dictionaries. The
law writers spoke in the same terms. Blackstone speaks of the excise,
what it is. That was 20 years or so before these words were used.
In 1797, 9 years after, the Encyclopaedia Brittanica of that edition,
takes Blackstone's definition as the definition.
The 13 States, when they adopted this Constitution gave power to
levy an excise. What would you say that they gave power to levy
by the term "excise"? Why, they gave the power to levy that which
by the common speech of the day was an excise, and nothing else.
Of course, I don't mean that they could be levied only on chaises
or property of that day. They could be levied on automobiles,
although those did not exist thpn. But the employing of labor was
a thing that occurred in those days, and if the act of employing labor
in those days was not a thing upon which an excise could be laid, it
was not comprehended by the term "excise", it has never become
so by any change in conditions since.
26 ORAL ARGUMENTS

If the suggestion is made in argument that we question the right to

levy a tax upon a natural right, we make no such question, because the
right to hold property is in this crude sense of the term a natural right.
But we say that if in 1788 that was not the kind of thing on which an
excise could be levied, there has been no chance since, and it is not a
'thing now on which an excise can be levied.
The next thing that we ask your consideration to is what was said
in the adopting conventions by the advocates of the adoption of the
Constitution. This excise was rather a hateful kind of tax. There
was a good deal of apprehension about it, and the different ones advo­
cating the adoption of the Constitution, in telling what the tax was,
described it in the terms to which I have referred-tax upon property,
tax upon property in consumption, in sale, in manufacture.
I respectfully submit that until someone can find a better definition
it would be* appropriate to take the definition which this Court has
heretofore given, and that indicates that it is a tax upon property in
action, in operation, in use, not a tax upon the capital but, as the very
word indicates, something cut out of the property.
Some of you may remember when the corn was taken to the miller
and he kept a tenth of it for the grinding. He excised a tenth of it for
the operation. The Government excises a portion of the property.
They take a portion of the property and cut it out for the Govern­
ment, and then it is liquidated in money. That is the compromise of it.
I respectfully submit, therefore, that before we get to any other of
the questions in this case this should fall, because it is not an excise
and it was not within the power of the Congress to impose it.
The next question is what this tax was imposed for. The only
title here involved is title 8, and the only sections directly involved
are 804, putting the inposition on the employer to pay his own even­
tually 3 percent, and 802, putting upon the employer the duty to pay
eventually 3 percent more, out of his own money. No segregation of
that for the employee. He is to pay 6 percent, but the statute says
that he can perform his obligations to his employee by paying him
97 percent of what he agreed to pay.
It is not a case where the employee is rendered liable for this tax.
There are no circumstances under which it can be got from the em­
ployee. It is the employer that is the one to pay this second tax
under 802, and he pays it just as he pays the one under 804. He
pays his 6 percent and he pays his employee 97 percent of what he
agrees to pay the employee.
That is the tax, if we may call it a tax. I submit that if it were
possible to get away from this being an excise and put into some other
kind of a levy, then it fails to be a tax because, characteristically, it is
not a tax. The conception of a tax is something put upon property,
and for the Government to seize from the individual something unre­
lated to property, save the capitation tax expressly for, is not a tax.
It does not make it a tax to call it a tax under those circumstances.
Now, for what was this levy imposed? It is said, first, that it was
just imposed to raise money. Of course, if it was a tax and was
imposed just to raise general revenue for the United States, there can
be no question that that is for the general welfare of the United States.
To get money is for the general welfare of the United States.
It has to be determined once for all, I submit, whether this was
laid for that purpose or was laid for some other purpose, and one
cannot vacillate on that question.
 ORAL ARGUMENTS 27
I am called upon to present the argument in two ways, because I
may not know in advance which will be your conclusion as to whether
this is to raise a general revenue or is to provide old-age benefits; but
it will be the one thing or the other in your judgment, and not a little
of both, because the elements to be considered in determining whether
it is good or not are so different in the two cases.
Reading the act, I submit that there can be no question in anyone's
mind but what this levy was made to provide old-age benefits. My
adversaries have called attention in their brief to the fact that this
might have been several different acts, the different titles might have
been different acts. Well, they might have been, but they were not.
It would have been pretty difficult to steer some of those titles through
as separate acts without any association with their neighbors, but this
was one act. I take it we may assume honesty anid sincerity in Con­
gress, and they say, not that it was the "Revenue Act of 1935"; they
said it was the "Social Security Act." Eleven titles were the Social
Security Act, and they start out-this is what the act is for:
"An act to provide for the general welfare by establishing a system
of Federal old-age benefits"-a system of Federal old-age benefits­
"and by enabling the several States to make more adequate provision
for aged persons, blind persons, dependent and crippled children,
maternal and child welfare, public health, and the adiuuinistration of
their unemployment compensation laws"-not to provide any unem­
ployment compensation, but only the administration of the States'
laws, leaving it to the States to provide for the way in which-not
exactly to provide for the way in which-to provide whether they
would do it in the way that Congress said it ought to be done-"to
establish a Social Security Board"-not a tax-gathering board but a
Social Security Board-"to raise revenue; and for other purposes."
The "raising of the revenue" got down mn with the "other pur­
poses." It was the residuary clause there.
This was passed by a Congress dependent upon the suffrage of the
country, to be brought back into office in accordance with the way in
which they had administered the affairs or legislated for the affairs of
the country, and they selected, we may assume, an honest tit-le, to go
forth into that community to let it be known what they had done,
and what they said first was "by establishing a system of Federal old-
age benefits" by a "security act"-security. Somebody could have a
right to the benefits. It is true they might repeal the act. They
might permit a breach of faith and take the security away again after
they had given it in terms which the common man whose mind oper­
ated honestly would understand to be the giving of security.
They pick out as the first thing to tax the wages of the smallest
wage earners in the country. They exempt from the tax the wages
above $3,000 a year. Is it within the bounds of reason to assume'that
the Congress would have done such a thing as that in order to raise
general revenue'? I submit that it flies in the face of all reason to
suggest such a thing as a possibility. The reason that they selected
those wages to be imposed on was because the recipients, the other­
wise recipients of those wages, would be the ones who were going to
have the security of an old-age benefit. That was the only reason
that they did it.
Now, I dare say that it may be that the constitutional power of the
Congress to repeal this act after they have collected from the small
wage earners this money exists, to deprive them of the security which
 28 ORAL ARGUMENTS

they said they were to have for paying this tax. It maky be it is within
the power of the Congress to do that. Congress has power to be quite
perfidious without transgressing the limitations of the Constitution,
but I venture to say that no Congress would ever be found that would
be guilty of the degree of perfidy that there would be in the repeal of
this act without making tantamount provision otherwise for the same
end.
Then you have the other thing. The wages that are taxed are not
all wages even below the $3,000. .They are not the wages of domestic
servants or farm laborers, and there are other exemptions that it is
unnecessaryto refer to, -because these' two prominently present the
quesqtion: Why were they not taxed? Why should not farm laborers,
some of whom very likely were getting more than the cobbler's
apprentice that is taxed-why should they not be taxed? Why, for
the obvious reason that this idea of old-age benefits was one that was
to be limited to the same classes of, people. If there had not been
the necessity for this circumlocution due to the different sovereignties
under which we live, they would have done what they recommended
be done in the case of the unemployment compensation. They did not
call for a tax there; they called for a contribution..- The employees
that were to get the benefit of this money were called upon to mae a
contribution, and that is the reality of what this- is. And the em­
caledupo tomake the contribution, and they were the.
ploerswer
of ustthe ameclasses.
emplyer
If akesecion210that
ou defines the prospective recipients of
nd ecton 11which defines the ones to be taxed, they
thebenfit,
are identia ilanguage except for one section about the over 65, and
it is perfectly obvious that the reason the over 65 is left out in the one
clause is because they were going to fall at that age into the benefits
that were coming in the benefit section.
If you looked only at the act itself, applying it to just the common
knowledge of the community, of what was being talked about, no
one, I submit, would have any doubt but what in the substance of the
thing~that money was being raised for the purpose of creating this
security fund. We had had these very troublesome times, and men
over 65 years of age are as hard up now as we hope they are likely to
be hereafter, but this act postpones until 1942 the time when any of
them shall have any of these benefits. If this was the provision out of
the general funds of the United States to provide for these people who
were in need in this way or deserving in this way, if they are in need,
it would begin now.
The obvious reason why there is a postponement until 1942 is be­
cause these funids raised under title 8 are to go to create the reserve
fund out of which these payments shall be made. These payments
raised in the present year, if raised in this way, would be just as avail­
able for the 65's and over now, and paid currently. They would not
be sufficient until the accumulations have been made of several years,
and then comes the time when these payments are to be made. That
indicates as clearly as could be indicated that this money was raised
under title 8 for the very purpose of furnishing the reserve fund,
provided for by title 2.
We are not here complaining of any appropriation. We are here
complaining of the fact that an attempt is being made, to take money
from us under the guise of a tax for the purpose of providing old-age
benefits. If that purpose is not a Federal purpose, then the req~ulre­
 ORAL ARGUMENTS 29
ments of the enacting clause have not been met. The validity of a
tax depends not only upon its going upon the things upon which it
may go, but that it is raised for the purposes of the United States,
namely, to pay its debts, provide its common defense, or to provide
for the general welfare of the United States.
We submit that the providing of an old-age annuity fund for the
needy and the nonneedy persons who have sustained only the calamity
of living after th~ age of 65 is not within the proine of the United
States, and that the tax must fall because it lacks that essential
quality of a Federal purpose.
Now, before going at length to the discussion of the Federal purpose,
I would ask your consideration next to the question whether this tax
meets the requirement of being uniform and not capricious.
There is no lgage in the Constitution that says that a tax shall
not b e cpici'ously laid. No language was necessary, because an
imposition upon the citizens by the Government which is capricious
is not a tax. The whole conception of taxation is the raising of money
by some fair method, and of ccurse within the boundaries of its powers
the method that the Congress deems to be fair is the one that must
prevail. "Reasonably levied", "proportionally levied'"-various words
used to define, but repeatedly this Court has said that if the selection
is capricious the tax is bad.
Now, assume that I am wrong in asserting that this tax is laid for
the purpose of providing old-age benefits, and assume for the moment
that it is laid for the purpose of raising general revenue. We forget
-titleII altogether now and we look at -title VIII.
The "because" of the tax is the employing of labor in industry and
trade and in all other ways in which there may be employment,
except agriculture and domestic service. We are not speaking now
of the fact that the old man on the farm can still work, and the old
man in the cobbler's shop cannot work. I should think that is, of
course, a matter for separate debate. But we are'speaking now not
of what he is going to get -out of this at all; we are speaking of who
should pay this tax; what sort of people should pay this tax.
A country carpenter, if he employs a journeyman, must pay the tax.
A country fanner employing a laborer does not pay the tax. The
affluent citizen who keeps a horde of servants does not pay the tax.
The cobbler who employs a worker at.-the same bench with him may
inever have started aweek with $10to his name. Propertylhas nothing
to do with it. Capacity to pay has nothing to do with it. The
success of his business has nothing to do with it. The extent of his
income has nothing to do with it. The profits that he is making
have nothing to do with it.
Can anyone think of any reason for pecking at the particular ones
pecked at? For that, I take it, is the test of caprice. If this is for
general revenue you could not think of a more excellent example of
pre caprice than the way that this has been laid. It might have been
lauid exclusively on baldheaded men or on gray-haired men or on those
who wore white shirts or those who wore blue shirts. There is no
reason whatever that can he assigned, I respectfully submit, for the
selections made if this was being raised for general revenue. It lacks
all the characteristics of a levy of taxes for the support of government.
Now, I ask that you assume that I am right in asserting that the taxt
is to provide old-age benefits but that it is not a regulation; that it is a
 30 ORAL ARGUMENTS

tax, a revenue-raising measure for the particular purpose. If it were

a regulation, one could see how different employments might be
classified and contributions exacted from the particular classes by
reason of the particular benefits that were to come to that class or to
the members of that class. But we cannot view it in the light, of a
regulation here, because I suppose that everyone admits that this
regulation of employment in domestic industry, in industry within
the State, is not within the power of Congress, and that this can be
supported only if it is a tax.
Well now, while the measure is the money paid out in wa~ges, so far
as you can get any indication of what the tax is for, it is for employ­
ing people. If you employ people, because of that fact you must
pay this tax. Well; it is not even that; for, while the thing, the em­
poig, the element of employing, is picked upon as the thing that
shall determine whether you will pay the tax or not, it is not applied
rationally or uniformly, because it is not put upon all those who do
that thing. It is not put upon those who employ in agriculture. It is
not put upon those who employ in domestic service. And therefore
it lacks a rational basis. It is a capricious tax in that sense.
Then we come to the question whether the furnishing of old-age
benefits is -a Federal purpose. That, of course, takes us into various
elementary considerations of the history of the creation of this Nation.
I respectfully submit that the Government of the United States has
no power and it is under no duty to support the indigent of the several
States.
When this Constitution was in process of adoption or was being pro­
moted for adoption there was no one within the area to be considered
who was not the citizen of an absolute sovereign government of the
State. The people who became the people of the United States could
not have adopted the Constitution of the United States without con­
sent of the States. It would have been an act of treason to the State
for them to adopt the Constitution. One of the necessary results of
the sovereignty of the States was that individuals owed complete
allegiance to the State, and it was the States and not the people of the
United States that adopted the Constitution.
ART. 7. The ratification of the conventions of nine States shall be sufficient for
the establishment of this Constitution between the States so ratifying the same.
We may assume that in a civilized community the sovereign is under
the duty to prevent the starvation of the people of the sovereignty and
that the providing of poor relief to those who can qualify for it is
a mere performance of governmental duty. It was the duty of the
State in 1786. Each of those States had that duty. They had the
correlative power of taxation for the performance of that duty.
The Constitution may be searched in vain for any clause or any
combination of clauses that transfers that duty to the United States.
There it rests, it has been recognized through all our history that there
it rested, and that the States retained the power, the full taxing power,
to provide for the carrying out of that duty.
Of course, I do not refer to what may be the duty of the United
States to take care of those within its category of government, the
employees engaged in interstate commerce, the employees of the Gov­
ernment itself, those who are engaged in defending the United States
or carrying on war. I am referring to those'persons who merely live
within the several States.
 ORAL ARGUMENTS 31
The Government of the United States was never given any power
-tolegislate even for the general welfare of the United States. I am
not approaching yet the question of taxation, but I assume that it is
now well settled that the Government of the United States has no
power to regulate the general welfare, to provide those things that a
soverign government must provide in the way of the ordering of the
community in which the people of the States live.
It was set up for two perfectly clearly set forth powers: One was
relations of tbe group to the outside world, and the other was the
.mutual relation between the States; and, of course, the most promi­
nent feature of this latter is in interstate commerce.
One has only to look at the Articles of Federation, which were the
forerunner of the Constitution, to see these same things set forth
there. The Articles of Federation were for the purpose of taking care
of the general and mutual welfare, and, of course, it requires no argu­
ment that the Federation got no power to control the internal affairs
of the States or to require the citizens of Georgia by taxes to support
those of New York above the age of 65 years.
No more did the United States. A very short time had elapsed
between the two documents. The same words were used in this
respect in the Constitution, except that the word "mutual" was
dropped out and an amplification of that was provided. for in inter­
state commerce, and the various special things that were pointed out.
Interstate commerce probably was in and of itself large enough to
take care of all those matters where the States might come in con­
flict. They could no longer derive those things by treat~y among
themselves or by warfare between them'. That was turned over to
the United States.
The general welfare of the United States was the general welfare
of the Government of the United States. I hope that I may be excused
by this learned Court from speaking on the subject about which the
Vourt kows so much more than I do, but there are indications of
nlot-­
Justice SUTHERLAND. I am sorry, Mr. McClennen; I don't hear all
you say. You let your voice drop.
Mr. MCCLENNEN. I was not saying anything really that was worth
while.
The power to tax was given to this Nation to provide for these
definite things: The common defense of the United States, the payment
of the debts-
Justice BUTLER. You are not speaking quite loud enough for me
to hear well all you say
Mr. MCCLENNEUN. The power to tax was given to provide for the
common defense, the payment of the debts, and the general welfare
.of the United States. "Of the United States" was there used as
being a Government, not a Territory, not the several peoples within
the Territory. It is used after "debts" and "common defense."
Obviously, it was not the debts of the people within the United
,States, the territory of the United States, that were to be paid. It
was the debts incurred or assumed by the Government of the United
'States. "Welfare of the United States" is used in exactly the same
-way, and welfare of the United States when power to tax is given is
the same thing as when duty to govern is imposed. There is a duty
in the United States to do certain things, and there is a power in the
 32 ORAL ARGUMENTS

United States to raise the nioney with which to dlo those things, and
that is what is the "welfare of the United States."
"General welfare"-we may concede that it is for the welfare of the
United States that everybody should be supported by the Govern.:.
ment. I resent a little its being limited to those over 65, but should
get over that resentment in a little while. If there is any duty to
support those over 65, there is a duty to support the infant who is
unable to' support himself; there is the duty to support the cripple;
there is the duty to support the incompetent; there is the duty to
support everybody who, by the exercise of the best of his abilities,
cannot support himself, and it may be that it would be for the general
.welfare of the United States that everybody should be supported by
the Government. The welfare recipient would advocate that, in all
probability.
There is no age limit to this, and it is not a question of whether it is
for welfare; it is a question whether 'it is for the welfare of the general
Government of the United States. Can anyone think of anything
t~hat would be much more for the welfare of the people of the United
States than to stamp out the use of narcotics? Yet it seems to have
been taken for granted-and more than that, expressed-that that is
not a United States purpose. There are many things that are for the
welfare of everybody within the United States that are not in any way
contributive to the general welfare of the Government of the United
States. I respectfully submit that the support of the aged is a thing
tiot' in character a part of the general welfare of the Government of
'the United States. If it is, the duty is owed, and this Court has just
said that -if there is the duty, though it be not a legal duty, it is the
moral duty, there is the power to tax for its performance and that it
comes within"the debt clause, that the debt Clause is broad enough to
take care of that.
The,Goveirnment of the United States was never set up as ant elee­
mosynary corporation. The Government of the United States cannot
engage in the administration of poor charity, getting its resources for
-that charity fromt the taxpayers 'of' the United States:' Of course,
there may be cases where what looks like charity is merely casting the
-breadon the water so that it may return after many days and is a good
commercial transaction. It may be that, there is a power to perform
mere charity to-foreigners, to keep the foreign relations of the, United
States in the best of condition. There may be cases where what looks
like charity is the performance of what you have just said is the debts
of the Umited States. !But there must be some governmental obliga­
tion, some governmental duty, in order that there may be the power
to tax for it.
The States did not give to the Government of the United States
the power to draw money from the citizens of the States to give away.
There cannot -be found anywhere within the Constitution any provi­
sion for any such power. It was set up as a government to protect
the rights of all %againt the outside world and to determine the rights
of State against Stat and the people of one State against the people
of another State. The idea that the people of South Carolina and
Virginia could be taxed to take care of the paupers of Massachusetts
and New York would have created consternation had it been suggested
at the ratification tables when the Constitution was being adopted.
In reality, what is being dealt with here is a, regulation and not a
taxation for the support of Government. The same question has
 ORAL ARGUMENTS 33
recently been dealt with under almost identical conditions by the
Privy Council in deciding where lay the powers as between the Prov­
inces and the Dominion of Canada, where they held that the Dominion
Government, having full taxing power but no power of. regulation of
the affairs within te community, could not-levy a tax for the purpose
of its being paid into a fund for the support of so much of the unem­
ployed, and, of course, the unemployed and the aged would come
within the same class. The reason why, it is necessary to take. care of
'the aged is because they are to such an extent on 'that account the
-unemployed.
That is a very analogous situation to the one that is presented by'
the Constitution of the United States. There is the power to tax hut
*not the power to regulate. And what this amounts to in real sub­
:stance is a regulation. When a State does it in an unemployment
acet, it exacts a contribution from employers with which to pay
-employees of themselves and others in times of unemployment. It
amounts to being a regulation by. law that a man shall not employ
another without paying him a certain wage, but the wage to be pai
*in part in money and in part in an assurance of money to be paid him
later. He earns it by working. He earns his old-age benefit by
-working. He gets his old-age benefit just as he gets his weekly wage,
-asa return for the work that he has done. And it is only in this way
,that there can be justified the assertions that this is a. provision for
contributive old-age benefits as distinct from those mh~erely furnished
by the Government, regardless of what they were to have done or any
-contribution that he has made.
The act came through exactly as, or in all substance as, had been
:suggested, urged, by the commission that had been appointed by the
President, and that wa's a commission, not on finding other sources of
revenue for the United States but a commission on the subject of
~economic security. He appointed that commission. Then ap­
pointed another, again not to find sources of revenue for the United
States, but an advisory council on economic security, and that com­
nussion reported. In a 50-page report there is no talk about raising
revenue for the Government of the United States, and there is much
about the different uubjects that are dealt with in the Social Security
Act, and they propose under the title "Old Age Security" compulsory
contributory annuities-compulsory contributory annuities, not an­
nuities furnished by the United States going out and finding its means
of doing it by the raising of general revenue. A man when he pays
a tax does not make any contribution to the building of highways.
This was not to be an act for the payment of a tax. It was an act to
provide for compulsory contributions, and they say:
The satisfactory way of providing for the old age of those now young is a con­
tributory system of old-age annuities. This will enable younger workers, with
matching contributions from their employers, to build up a more adequate old­
-ageprotection than it is possible to achieve with noncontributory pensions based
upon a means test.
"To build up"-they were going to build it up; the workers and
their employers were going to build it up by making contributions to
it, and the way in which it was worked out was this method, tha~t "the
burden upon future generations for the support of the aged can be
lightened in this way."
That is, the tax upon public resources obtained by taxation will be
diminished by making the workers during their period of working
34 ORAL ARGUMENTS

and their employers during that period make their own contributions..
Well, that is a regulation of a method of employment, a way in which.
industry shall be conducted within the State. It is not taxation.
I am not suggesting that there may not be taxation for a particular-
purpose where the payers of the tax are particularly benefited by.
that purpose, and that it may not be imposed on a certain portion,.
but that is not what was done here. That was not the aim. That,
was not what they were talking about in these preliminaries. And
they go on:
The contributory annuity system include on a personal basis all manual.
workers and nonmanual workers earning less than $250 a month.
You will observe the very minimum of $3,000 that was adopted into.
the act.
"The compulsory contributions are to be collected through a tax on
pay rolls and wages, to be divided equally between employers and em.­
ployees." "The compulsory contributions are to be collected through
a tax"-they were going to call the contribution a tax, but it was a.
contribution. It w~ould have been no different if they had not used
the word "tax" and had used the word "contribution", and if it had.
not been for the possibilities envisaged in the taxing clause they would
have spoken in the same language that they speak in the State act, "a
contribution". Workmen's contribution acts-same sort of thing.
The employers, regardless of responsibility for the act, make a con­
tribution to the fund that shall take care of the misfortunes of the em­
ployee , not of himself, but of himself and others of the class or gen­
erally.
That is, I submit, clearly defined as not taxes but enforced contribu­
tions, if we look at the report of the commission. That was submitted
by the President to the Congress with the recommendation for legisla-­
tion in accordance with it, and the legislation that was enacted by
Congress was in all substance in accordance with it. The Committeer
on Ways and Means in their report says of this part-
and to make a beginning in the development of measures which will reduce de­
pendency in the future, to assure support for the aged as a right.
Now, no -one would ever think when he was paying taxes that he.
got by that payment of taxes a right to be supported by that Govern­
ment in his old age because he paid taxes, even when he had money
enough to support himself.
The Senate committee report follows the same line:
Means of providing old-age security as a right and not as a public charity.
What has been done here is to set up a regulation of the affairs,
of the State. Now, whether we should have old-age protection in
this way or not is a question of policy, and I do not speak for a moment,
to this Court on the question of whether it is good policy or bad
policy because, obviously, it is not for this Court to say. But it is a.
question of policy to be determined by the sovereign government.
Now, the sovereign government of Massachusetts may believe that.
it may be for the welfare of the State to have people do their owni
saving, build up their own strength of character, have those who.
are frugal and prudent come out in old age better than those who
are wasteful and extravagant. It may be that this is a more human­
itarian idea that should prevail, and another government may take-
another view of it. But has not Massachusetts the right to say
 ORAL ARGUMENTS 35
"Our citizenry shall continue to be governed and regulated under
such a system as that"?
We think of a pure gift as not being a regulation, but it is. Regu­
lation does not mean speaking in terms of compulsion. Regulation
is deterinin the ways in which the affairs of the community shall~
run. Mgassachusetts, if you please, says "We believe that it would
be better to take care otf those who must be taken care of in old age
in a meager way and build up this strength of the community, strength.
in moral character and substance, in this way." May not Massa­
chusetts do that? Has Congress the power to prevent that any
longer being the policy in Massachusetts? I submit there is no
provision in the Constitution anywhere that permits the Congress of
the United States to interfere with that method of running the
internal affairs of any State.
ORAL ARGUMENT IN REPLY ON BEHALF OF THE PETI­
TIONERS, BY CHARLES E. WYZANSKI, JR., SPECIAL
ASSISTANT TO THE ATTORNEY GENERAL
Mr. WYZANSKI. May it please the Court, I shall address myself
to the three challenges which have been directed to this statute.
It is asserted, first, that the tax laid by title 8 is not-a valid tax qua
tax. It is then said that a person who is assessed for the tax under
title 8 has the right to refuse payment because title 2, which provides
for old-age benefits, is invalid and unconstitutional. And finally, it
is said that, even if the tax is good qua tax and the spending is good
qua spending , taken together these two titles form a regulatory system
not within the power of Congress.
The first point is whether the tax is good qua tax. As Your Honors
will recall, in the Steward case (October term, 1936, No. 837) we
argued rather elaborately the point that the Constitution authorizes
the imposition of an excise tax upon employers measured by pay roll.
The tax is upon something definite, despite the contention to the con­
trary by the respondent. It is upon the receipt of services, which is
to all effects and purposes just as taxable as the receipt of property,
which was considered in Knowlton v. Moore (178 U. S. 41).
It has been argued at the bar that there was no precedent in the
eighteenth century which would have familiarized the Constitutional
Convention with this sort of tax. As I said to Your Honors in the
Steward case, there was in 1777 in Great Britain a tax laid u~pon
employers of domestic servants, the tax to be at the rate of 21 shillings
per employee. And if there is one subject which the framers of our
Constitution knew, it was the taxing policy of George III. This
tax was, in fact, in England called an excise tax, as an examination
of the 1869 reenactment of the 1777 statute shows.
Not only is the tax a valid excise tax, but it is clearly "uniform"
under the interpretation of the rule of uniformity again and again
given by this Court. The rule is that the liability shal be the same
mn every State. And there can be no question whatsoever that the
canon of uniformity has been here observed.
It is suggested that the tax is arbitrary and capricious, in violation
of the fifth amendment. To that we have already given our answer
in the Steward case. This Court has again and again stated, perhaps
nowhere more clearly thatn in Flint and Stone Tracy in 220 United
 36 ORAL'ARGUMENTS

States Reports, that Congress may select for taxation such subjects
as it sees fit; and despite the contrary contention from the respond­
ent, the -Connolly case (229 U. S. 322, 329) makes it clear that in
questions of taxation the power of selection is greater, not less, than
in questions of regulation.
Before passing to oth~er questions, perhaps I ought to mention a
point which Mr. Justice Butler raised this morning, and that is the
numerical coverage of the tax. The Senate committee report which
accompanied this bill estimated, at page 26, in'table 9,, that the
number of gainfully employed in the United States is something short
of 47,000,000 persons, and the number of persons covered by this
tax was estimated to be 25,000,000, and that estimate has fallen short
of the fact, because there are, indeed, 26,000,000 or more persons
who believe themselves to be covered by the tax and who have
regitered accordingly.
Ipass now to the second question:
Justice BUTLER. That leaves 21,000,000?
Mr. WYZANSKI..- Twenty-one million. That includes those who
are self-employed or otherwise gainfully employed. Your Honor
asked in the !Alabama Unemployment Compensation case what the
term "gainfully employed" meant. That term is utilized in the
census to cover- everybody who works at a regular job, whether he
works for himself or his family or works, for someone else.
Justice BUTLER. The number included in the exemptions here under
farm labor, and so on?
Mr. WYZANSKI. That means 21,~000,000 out of the 47,000,000 are
not covered; 47,000,000 are gainfully employed in the United States;
26,000,000 are in employment covered by this act; 21,000,000 are not
in employment covered by this act.
I come to the second question, which ~is whether-
Justice BUTLER. Have you seen the figures on page 41 of Mr.
McClennen's brief?
Mr. WYZANSKI. I think, though Mr. McClennen may correct me
on that-
Justice BUTLER. They seem not to be in harmony, but do not
delay yourself about it'
Mfr. WYZANSKI. Mr. McClennen says they come from the House
report. I didn't know that.
The second inquiry is whether a person who pays the tax under
title 8 may raise any question with respect to the validity of the
old-age benefits under title 2; and if so, whether those old-age bene­
fits are valid exercises of the power entrusted to Congress under
article I, section 8, clause 1, of the Constitution.
Your Honors will bear in mind that the tax collected under title 8
is in no sense earmarked. We therefore do. not have the problem
which was before this Court in the Coconut Oi case (CincinnatiSoap
CO. 'v. United States, No. 659, October Term, 1936) or in the Butler case
(297 U. S. 1). Your Honors also will bear in mind the fact that this
particular tax is itself in no way regulatory, as the tax was deemed
to be in United States against Butler.
The question arises, then, whether this case does not come within
the rule of Frothin /hamv. Mellon (262 U. 5. 477), so that the taxpayer
under title 8 stands in no position whatsoever to question title 2.
Justice BUTLER. What was the precise question involved in that?
 OIIA. .IIOIME~r837­
Mr. W-kZANSKI. In Frothinghamv. Mellon the question was whether
:a genbral taxpayer might question a particular appropriation.
Justice BUTLER. What was the appropriation for?
'Mr. WYZANSKI. The appropriation was for maternity welfare.
The question then comes whether title 2 is a valid exercise of the
power of Congresst, It has~been-suggested, by the respondent that the
only power which Congress has with respect to appropriations is to
appropriate to pay the debts of the United States and to prov-ide-for
the common defense and general welfare of the Government of the
United States. It seems to us that that reading of the clause is much
too narrow and in conflict with the decisions of this Court in United
-Stateiv. Realty Company in the one hundred and sixty-third United
States, and more particularly in conflict with the decision in United
States against Butler and the decision of the other day in the Cincinnati
Soap ca~se.
It is our view that this Court, having accepted the Hami~ltonian and
Story doctrine, has committed itself to a much broader view of article
I, section 8, clause 1, than the respondent in this case takes.
Only the other day in the CincinnatiSoap case Your Honors pointed
out that. it would. "require a -very plain case -to warrant the courts in
setting aside th~e conclusion of Congress" that an expenditure was for
the general welfare.
We submit that this is no very plain case for setting aside the
conclusion of Congress.
Mr. Jackson, in his opening argument, made clear the extent to
which the number of aged is increasing in this country. He called
your attention to .a table which showed that in 1870 the aged consti­
tuted only 3 percent of the total population. He pointed out that in
1930 those over 65 had come to be almost 6 percent .of the population,
and he spoke of a projection which indicated that in 1980 the probabili­
ties were that there would be 22,000,000 persons in the United States
over the age of 65 and that these 22,000,000 persons would constitute
14 percent of the then estimated population of 158,000,000.
These aged persons are already finding it increasingly difficult to get
and to keep employment. We have passed into a phase of urban
industrial life in which, as Mr. Jackson stated, cash is an absolute
necessity for survival. And yet, these aged persons find it more and
more difficult to retain the-jobs that they have and to get new jobs
when they lose their employment. If they retain their jobs, often
they suffer a reduction in wages. Clearly, if they are paid on a piece
basis, age counts heavily against them. Even where that is not the
case, new technical processes to which they cannot adapt themselves.
result in a reduction of their compensation from their particular em­
ployers. And then, if in time of crisis or in a cyclical depression or a.
seasonal depression they lose their jobs, it is very difficult for them
again to'secure employment.
In answer to a question from Mr. Justice Stone this morning, Mr.
Jackson referred to a statement which was to be found in the footnote
on page 58; and in that statement in the footnote at page 58 it-is
shown that a man at the age of 40 has only 19 percent of the chance
that a man at the age of 20 has. of getting a job; and when a man gets
to be between 60 and 64 there is a handicap of 83 percent in his case
as compared with workers as a whole. Needless to say, the handicap
for aged women is even greater.
38 ORAL ARGUMENTS
To take care of this danger of old age a number of different attempts
have been made. In the first place, there are some private pcnsion
plans. But those private pension plans, as recently as 1930, covered
only,4,000,000 employees, and many of those were on the railroads.
Of those covered by the plaxis~only 90,000 got benefits in any one
year. Then, there is group insurance. The. figures on group mnsur­
ance show that in 1935 only 6,500 in the United States got benefits.
Finally there are trade-union plans. Those trade-union plans,
according to -the most recent estimate, spent less than $4,000,000 a
year. That means that if they gave a benefit of $15 a month they
covered less than 25,000 persons.
Not only are private plans inadequate, but charity is also inade­
quate, partly for the reason that Mr. Jackson gave and partly because
charity does not address itself to a problem of this sort, which is
permanent and which is a problem very different from that which
private chmrity has cared for, except in a few~instances.
In the end, the people who become aged turn for their relief to
persons other than private employers and charity. The- Social
Security Board has estimated that of the people over 65 in the United
States two-fifths to one-half are dependent on their families. Abou t
-aquarter, perhaps no more than a fifth, are dependent upon public
relief of one sort or another. One-eighth are able to earn something,
and one-sixth have some savings.
The consequence is perfectly obvious. The States are tremendously
overburdened with this pro~blem of the aged. In the year 1936­
that is, last year-the States spent for the aged $161,000,000, of which
about one-half was met from the Federal Treasury.
Justice SUTHERLAND. Met from what?
Mr. WYZANSKI. Met from the Federal Treasury by direct grant to
the States.
Can there be much question that at this rate of growth the States
will be unable to bear the burden? It is said that if it were not for
these old-age benefits, by 1950 the States alone will be called upon to
spend $700,000,000'annually for their aged. In no year of the depres­
sion did they spend more than 500 million for the unemployed. How
are they possibly going to make provision for the aged unless steps are
taken now'?
And-the States cannot act alone in this problem. There is first the
very serious question of records being kept. In a country like ours,
young as it is, people mnove around from one part of the country to
another, and it would be very difficult to have adequate records in the
single States.
Moreover, it is quite questionable whether the States could, acting
alone, impose a tax that would not put them at a grave economic
disadvantage with their sister States.
If the Federal Government endeavored to make some sort of subven­
tion to them the consequence would be that the Federal Government
would have to determine whether each State should have a reserve plan
or a pay-as-you-go plan. It would have to lay down many details
which are referred to in our brief and which are explained in a very
excellent article by Prof. J. Douglas Brown, to which we also refer,
and which will be found in Law and Contemporary Problems, April
1936.
In this situation the Congress has enacted title 2. Can it be said
that this is a very plain case-in which Congress has exceeded the
 ORAL ARGUMENTS 39
authority given to it? This expenditure is clearly national, general,
And not local. It meets the tests laid dowa by Story and by Hamilton.
.In the course of the argument in the CincinnatiSoap case it was sug­
gested from the bench that an appropriate test of the general-welfare
power might be whether the expenditure met a national objective.
That test is the test which Chief Justice Marshall had in mind, for,
-in McCulloch v. Maryland in the Fourth of Wheaton, at page 409,
he refers to the power of the National Government to apply the
.revenue for-and I quote-"national purposes", which is a, much
broader power than the power that the respondent believes has been
given to Congress.
If, as we assert, title 8 is good as a taxing measure and title 2 is good
as a spending measure, it seems to us very difficult to understand how
the two of them taken together can be invalid. Ever since McCulloch
v. Maryland (4 Wheat. 315), and indeed as recently as the Norman case
in 294 United States Reports (294 U. S. 240), this Court has laid down
the principle that two powers may be used in conjunction as well as
-severally by Congress, and we see no reason why that principle does
not apply here.
Indeed, if the two titles are here read together instead of separately,
we think our case may be stronger rather than weaker, for much which
-seems capricious to the respondent has a clear explanation if the two
titles be read together.
But it is said that reading the two titles together we find an expro­
priation and a regulation by Congress in a field reserved to the States.
The charge of expropriation seems to us plainly unfounded. Here
the money taken from the taxpayer goes into the general Treasury.
It is in no sense earmarked for anyone. But even if it were earmarked
to pay the benefits, that would not make it an expropriation. From
early history the proceeds of taxes have been earmarked for special
-purposes. This Court recognized that fact a~s recently as Monday
last in the CincinnatiSoap case.
Another very interesting precedent for this tax is furnished by a
-statute of 1601 in England, the statute of 43 and 44 Elizabeth,
Chapter 2, which imposed so-called "poor rates", which are taxes,
upon occupiers of land, the money to be earmarked to pay relief to
those of the poor who were not able-bodied and to put those who were
.able-bodied to work.
It seems to us that the correct definition of a tax was given in the
Butler case, where it was said at page 64 that the power to tax is "the
power to tax for the purpose of providing funds for payment of the
Nation's debts and making provision for the general welfare." This
tax, we contend, is a tax to make provision for the general welfare,
if it is not a tax for the general revenue, and in either view is entirely
valid and not an expropriation.
I turn now to the charge that it is a regulation, and first of all I note
that this statute in none of its parts requires any man to retire from
-work at any time. It has no significant tendency to induce a man to
.retire, for the benefits are conservative in amount.
Moreover, I point out that the tax is not levied on the employment
*of a man who is over 65. And why not? In order that there may be
no inducement for a man when he reaches the age of 65 to retire. The
employer is encouraged to keep him at work, and the employee is
encouraged to stay at work.
40 O)RAL ARGUMENTS
It is sometimes saidj that this is "a system of social insurance." It
Riatters not what t'he label is~,;for here we have nothing but an exercise
of the taxing power and the spending power. That names are unim­
portant is shown by McCullocA v. Maryland, where this Court upheld
a bank, although the power to create a bank is not in specific -terms
given in the Constitution. The bank was the resultant of the exercise
of powers conferred. 'And so here, if this be social insurance, it is the
resultant of powers specifically conferred.
It is also said by the respondent that this is a case in which we have
a regulation of the wage relationship. Now is that so? I point out
that nowhere in this statute is the employer forbidden to deduct from
his employees the amount which he pays in excise taxes. The employer
is at liberty to reduce by 1 percent the wages of his employees if he
wishes to do so. I do not mean to say that I would encourage that
practice, but it is open to the employer to adopt the practice, for there
is nothing in the statute which forbids it.
Moreover, it cannot be said that any employer knows in advance
that his employees-that his employees-Will get any part of what
that employer or other employers pay to the Treasury of the United
States. .If an employee dies before he reaches the age of 65-and
many employees of course will die before that time-his estate will
receive back merely the amount he has paid in taxes plus some 16 per­
cent increment, and that 16 percent increment may be much less than
the interest he would have earned on that money deposited in a
savigs bank.
Three cases are referred to as having some bearing upon this sub­
ject: United States v. Butler, (297 U. S. 1), the RailroadRetirement case
(RailroadRetirement Board v. Alton R. R. Co., 295 U. S. 330), and the
decision of the Privy Council in Attorney General,of Canadav. Attorney,
General of Ontario (No. 101 of 1936).
This case is not like -United States v. Butler, for here there are no
regulatory features whatsoever, no contracts, no other devices to
regulate.
The Railroad.Retirementease is not an authority here, for that case
involved a statute which was passed under the commerce power,
which was considered- under the commerce power, and was con­
demned under the commnerce power. There clearly regulation was
involved, for men over the age of 65 'were required to retire unless
some particular exemption was made in their case.
The Privy Council case has also been referred to by the respondent,
and I think in turning to that case, which goes under the name of
Attorney General of Canadav. Attorney General of Ontario, it is impor­
tant to bear in mind the caveat which Mr. Justice Holmes uttered in
Diaz v. Gonzales in 261 United States. He reminded us that when
we turn to a foreign system of law our tools of grammar and logic
may be inadequate to understand the tacit assumptions which underlie
a case.
And that is very true here, for, in the Dominion Constitution it is
provided that those powers which are given to the Provinces are,
exclusively reserved to them, a situation which, as McCulloch against~
Maryland remiinds us, does not exist under the tenth amendment.
Moreover, that statute was a statute drafted in terms upon a,
contributory basis and stands like the Railroad Retirement Act and-
not like this act.
 ORAL ARGUMENTS 41
One final word about this statute as a whole: This statute -has the
great merit of laying "visible" taxes. It teaches effectively that
people do not get something for nothing. It correlates, if you will,
the benefits to the burdens.
There is another thing to be remembered about this statute. The
benefits are keyed to wages, and that preserves a very important
factor in our national life. It makes certain that benefits in different
parts of the country will correspond to wages in different parts of the
country, and the need and the value of that correlation will be well
understood by Your Honors.
Another point about this statute is that it meets not only the need
of the dependent aged; it meets the need and mitigates the dread of
people before they reach old age, for no man before he reaches the
age of 65 knows whether or not he will be dependent on that date,
nor does he know for how long an old age he must provide. This
statute reassures him and thereby breeds in the body politic an im­
*portant self-confidence.
And finally, this statute, by its relation of taxes and benefits, if
there be a relation, and by its moral promise of future benefits, gives
to every man a vital stake in our present political and economic order.
(Whereupon, at 4:30 p. in., the Court adjourned until 12 noon
Monday, May 17, 1937.)
0
74m' CONGRESS 1 Z

IN THE 110 USE OF REPRESENTATIVES

JANUARIY 17, 1935
Mr. DouairroN introduced the following bill; which was referred to the Com­
mittee on Ways and Means and ordered to be printed

A BILL
To alleviate the hazards of old age, unemployment, illness, and
dependency, to establish a Social Insurance Board in the
Department of Labor, to raise, revenue, and for other
purposes.
1 Be it enacted by the Senate and House of Representa­
2 tives of the United States of America in Congress assembled,
3 TITLE I
4 APPROPRIATION FOR OLD-AGE ASSISTANCE

5 SECTION 1. For the purposes of this title, there is

6 hereby appropriated, from funds in the Treasury not other­

7 wise appropriated, the sum of $50,000,000 for the fiscal

8 year endig June 30, 1936, and there is hereby authorized

9 to be appropriated for each fiscal year thereafter the sum of
 2
1 $125,000,000, of which sums 99J per centumn shall be

2 apportioned among the several States as hereinafter

3 provided.
4 ALLOTMENTS TO STATES FOR OLD1)-AGE ASSISTANCE

5 SEC. 2. The Federal Emergency Relief Administrator

6 (hereinafter called the "Administrator ") , as soon as possible

7 after the commencement of each fiscal year, shall make allot­
8 ments, in amounts as provided in section 6 of this Act, to each

9 State which, through a State old-age authority, has sub­

10 mitted and had approved by the Administrator a State plan
11 for old-age assistance, and which, through its legislature,
12 has accepted the provisions of this title: Provided, That
13 such acceptance may be made, when such legislature is not

14 in session, by the Governor of such State, to be effective

15 until the close of the next session of such legislature
16 thereafter.
17 DEFINITION OF OLD-AGE ASSISTANCE

18 SEC. 3. As used in this title, " old-age assistance " shall

19 mean financial assistance assuring a reasonable subsistence

20 compatible with decency and health to persons not less than
21 sixty-five years of age who, at the time of receiving such
22 financial assistance, are not inmates of public or other
23 charitable institutions.
 8
I APPROVAL OF STATE OLD-AGE PLANS

2 SEc. 4. A State plan for old-age assistance, offered by

3 the State authority for approval, shall be approved by the

4 Administrator only if such plan­
5 (a) Is State-wide, includes substantial financial partici­
6 pation by the State, and, if administered by subdivisions of
7 the State, is mandatory upon such subdivisions; and
8 (b) Establishes or designates a single State authority
9 to administer or supervise the administration of the plan and
10 insures methods of administration which are approved by
11 the Administrator; and
12 (c) Grants to any person whose claim for assistance

13 is denied the right to appeal to such State authority; and

14 (d) Provides that such State authority shall make
15 full and complete reports to the Federal Emergency Relief
16 Administration in accordance with rules and regulations to
17 be prescribed by the Administrator; and
18 (e) Furnishes -assistance at least great enough to
19 provide, when added to the income of the aged recipient, a
20 reasonable subsistence compatible with decency and health;
21 and, whether or not it denies assistance to any aged persons,
22 at least does not deny assistance to any person who
23 (1) Is a United States citizen; and
 4

1 (2) Has resided in the State for five years, or

2 more within the ten years immediately preceding appli­

3 cation for assistance; and

4 (3) Has an income which when joined with the

5 income of such person's spouse, is inadequate to provide

6 a reasonable subsistence compatible with decency and

7 health; and
8 (4) Is sixty-five years of age or older: Provided,

9 That until January 1, 1940, but not thereafter, assist­

10 ance may be denied to otherwise eligible persons who

11 are less than seventy years of age; and

12 (f) Provides that so much of the sum paid as assist­
13 ance to any aged recipient as represents the share of the
14 United States Government in such assistance shall be a lien
15 on the estate of the aged recipient which, upon his death,
16 shall be enforced by the State, and that the net amount
17 realized bv the enforcement of such lien shall be deemed
18 to be part of the State's allotment from the United States

19 Government for the year in which such lien was enforced:

20 Provided, That no such lien shall be enforced against any
21 real estate of the recipient while it is occupied by the re­
22 cipient's surviving spouse, if the latter is not more than
~23 fifteen years younger than the recipient, and does not marry
24 again.
 5
1 REPORTS BY STATES

2 SEC. 5. To obtain the benefits of this title, a State

3 old-age authority shall submit to the Administrator at such
4 time and upon such forms as he may prescribe­
5 (a) An annual statement of the amount of the appro­
6 priation made by the State for its current or ensuing fiscal
7 year for the purpose of carrying out the State plan, stating
8 how much of such appropriation is for the actual payments
9 of old-age assistance and how much for the payment of the
10 expenses of administration; and
11 (b) An annual estimate of the sum which must be
12 contributed by the political subdivisions of the State during
13 such year for the purpose of carrying out the State plan,
14 estimating how much of the sum is for payment of such
15 old-age assistance and how much for the payment of the
16 expenses of administration; and as soon as possible there­
17 after, a statement of the exact sums thus contributed; and
18 (c) At least once in every three months, a statement
19 of the amount, actually paid, as old-age assistance, to each
20 person sixty-five years of age or over, and the amount
21 actually expended for the purpose of administration; and
22 (d) An annual statement of the amount collected, if
23 any, from the estate of any assisted aged person, for which
 6
1 the State is accountable to the United States under section
2 4 (f) of this Act.
3 (e) An annaual statement of the exact amount. if any.
4 of an allotment made under this title to such State remnainin,,;
5 unexpended at the close of the year -for which such allotment
6 was made.
7 AMOUNT OF AL1 LOTMENTS TO STATES

8 SEc. 6. (a) The Administrator shall compute annually

9 the amount to be allotted to such State at the sumn of (a)
10 and (b) of section 5 of this Act, after deducting therefrom
it the sum of (d) and (e) of such section. In computing the
12 allotment for administration, only so much of the appro­
13 priations and/or contributions for that purpose by the State
14 and its political subdivisions shall be taken as a basis of
15 computation which does not exceed 5 per centumn of the
16 appropriations for old-age assistance.
17 (b) The Administrator shall direct that the amount of
18 an allotment shall be changed when, under section 5 (b), a
19 definite statement shows that the sums actually required to
20 be contributed differ from the estimated amount, and the
21 change in the allotment shall be in relation to the variation
22 between the estimate and the actual requirement.
 .7
1 (c) If the sum of all allotments be in excess of the

2 appropriations for the purpose, then the allotment to each

3 State shall be diminished to that percentage which the
4 appropriations bear to the sum of all allotments.
5 (d) Any unexpended amount of any allotment to a
6 State at the end of the year for which such allotment was
7 made shall be available to the Sta-te for the ensuing year.

8 (e) The Administrator may withdraw his approval

9 of a State plan, if after his approval thereof such plan fails
10 to comply with the conditions specified in section 3 of this
11 Act. In case of such withdrawal of approval, the Admin­

12 istrator shall notify the State authority of his action and the
13 reasons theref or, and shall notify the Secretary of the
14 Treasury to withhold payments to such State.
15 PAYMENT OF INSTALLMENTS

16 -SEC. 7. The Administrator shall annually notify the

17 Secretary of the Treasury and the treasurers of the several

18 States of the allotments made under this title, and shall

i9 periodically notify the Secretary of the Treasury of the
20 amounts payable as quarterly installments to the treasurers
21 of the several States. The Secretary of the Treasury, after
22 receiving such notice, shall pay such quarterly installments

23 to the treasurer of each such State from the sumrs allotted

24 to it, unless the Administrator notifies him to withhold pay­
 1 ment of any installment, or to change the amount of any

2 allotment, in which case he shall act in accordance with

3 such notification: Provided, That no such installment shall

4 exceed one-half of the amounts expended in such State, in

5 the quarter immediately preceding the payment of such
6 installment for the payment of old-age assistance, nor shall

7 it exceed $15 a month per person, and for the administra­

8 tion of the State plan, up to 5 per centum of the total

9 amount expended under such plan in such quarter.

10 ACTION OF COMPTROLLER GENERAL

11 SEC. 8. The Comptroller General is authorized and

12 directed to allow credits in the accounts of the Treasury
13 of the United States for payment of allotments in the

14 amounts notified him by the Administrator.

1a' ADMINISTRATION

16 SEC. 9. From the moneys becoming available under

17 or in accordance with this title not more than one-half of

18 1 per centum. may be expended by the Administrator for
19 all necessary expenditures, including the employment of
20 experts, assistants, clerks, and other persons in the District
21 of Columbia and elsewhere, the purchase of supplies, mate­
22 rial, equipment, office fixtures and apparatus, and the in­
23curing of travel and other expenses, as the Administrator
 9

1may deem necessary to carry out the purposes of this title.

2 The Administrator shall include in his annual report to
3 Congress a full account of the administration of this title
4 and expenditure of the moneys herein appropriated or
5 authorized. The President is authorized to transfer at any

6 time to any officer or agency of the Government, the duties

7 and powers conferred upon the Administrator under this

8 title.
9 RULES AND REGULATIONS

10 SEC. 10. The Administrator is authorized to make all

11 rules and regulations necessary to effectuate the purposes

12 of this title.

13 INCLUSION OF TERRITORIES AND DISTRICT OF COLUMBIA

14 SEC. I11. As used in this title the term "State"

15 includes Hawaii, Alaska, Puerto Rico, and the District of
16 Columbia.

17 TITLE II

18 APPROPRIATIONS FOR AID TO DEPENDENT CHlILDREN

19 SECTION 201. For the purposes of this title, there

20 is hereby appropriated, from funds in the Treasury not
21 otherwise appropriated, the sum of $25,000,000 for the fiscal

22 year ending June 30, 1936, and the sum of $25,000,000

23 is hereby authorized to be appropriated for each fiscal year
24 thereafter, not more than 991s per centum. of such sums
 10
1 to be apportionedl among, the several States as hereinafter

2 provided.
3 ALLOTMENTS TO STATES FOR AID TO DEPENDENT CHILDREN

4 SEC. 202. The Administrator shall, as soon as pos­

5 sible after the commencement of each fiscal year, make

6 allotments, in amounts as provided in section 206 of this

7 Act, to each State which, through a State authority, has

8 submitted and had approved by him a State plan for aid

9 to dependent children, and which, through its legislature,
10 has accepted the provisions of this title: Provided, That
11 such acceptance may be made, when such legislature is
12 not in session, by the Governor of such State, to be effective
13 until the close of the next session of such legislature there­

14 after.
15 DEFINITION OF DEPENDENT CHILDREN

16 SEC. 203. As used in this title, " dependent children"

17 shall mean children under the age of sixteen in-their own

18 homes, in which there is no adult person, other than one

19 needed to care for the child or children,, who is able to work
20 and provide the family with a reasonable subsistence com­
21 patible with decency and health.
22 APPROVAL OF STATE PLANS FOR AID TO DEPENDENT

23 CHILDREN

24 SmC. 204. A State plan for aid to dependent children,

25 offered by a State authority for approval, shall be approved

26 by the Administrator only if such plan­

 11
1 (a) Provides that not later than June 30, 1936, and

2 thereafter, aid to dependent children shall be available, to

3 persons in need of the same, in every political subdivision
4 of the State, and that the State shall make substantial con­
5 tributions to the payment thereof; and

6 (b) Provides that such State authority shall make full

7 and complete reports to the Federal Emergency Relief Ad­
8 ministration in accordance with rules and regulations to be

9 prescribed by the Administrator; and

10 (c) Furnishes assistance at least great enough to pro­
11 vide, when added to the income of the family, a reasonable
12 subsistence compatible with decency and health; and
13 (d) Establishes or designates a single State agency, to

14 administer or supervise the administration of the plan and

1,5 insures methods of administration and payment which are
16 approved by the Administrator; and
17 (e) Does not impose a residence requirement, as a
18 condition precedent to the granting of such aid, of longer
19 than one year.
20 REPORTS BY STATES

21 SEC. 205. To obtain the benefits of this title a State

22 authority shall submit to the Federal Emergency Relief Ad­

23 ministration at such time and on such forms as the Adminis­
24 trator may prescribe­
 12

i. (a) An annual statement of the amount of the appro­

2 priation made by the State for its current or ensuing fiscal

30 year, and the amount made available for such year by the

4 political subdivisions of such State, for the purpose of carry­

5 ing out the State plan for aid to dependent children; and

6 (b) At least once in every three months, a statement

7 of the amount actually expended for such purpose; and

8 (c) An annual statement of the exact amount, if any,

9 of any allotment made under this title to such State, remain­
10 ing unexpended at the close of the year for which such allot­
11 ment was made; and

12 (d) An annual statement of the number of dependent

.13 children whose mothers are receiving aid or are on the wait­

14 ing list therefor under the State plan for aid to dependent
15 children.
T
16 AMHOUNT OF ALLOTMENTS ~OSTATES

17 SnE. 206. (a) The Administrator shall compute annu­

18 ally the amount to be allotted to such State at a sum equal
19 to one-third of the amount reported under section 204 (a)
20 If the sum of all allotments under this paragraph be in
21 excess of the appropriations for the purpose, then the allot­

22 ment to each State shall be diminished to that percentage

23 which the appropriations bear to the sum of all such allot­
24 ments.
 13

1 (b) The Administrator shall allot, in each fiscal year,

2 so much of the amounts made available under this title for

3 the preceding fiscal year as were not required for the pur­

4 poses of paragraph (a) of this section, to any or all States

5 with approved plans for aid to dependent children, in amounts

6 apportioned by him on a basis of need, taking into account,

7 among other things, the numbers reported under section 205

8 (d) of this Act.

9 (c) Any unexpended amount of any allotment to a

10 State at the end of the year for which such allotment was
11 made shall be available to the State for the ensuing year.

12 (d) The Administrator may withdraw his approval

13 of a State plan for aid to dependent children, if after his

14 approval thereof such plan fails to comply with the condi­

15 tions specified in section 204 of this Act. In case of such

16 withdrawal of approval, he shall notify the State authority

17 of his action and the reasons therefor, and shall notify the

18 Secretary of the Treasury to withhold payments to such

19 State.
20 PAYMENT OF INSTALLMENTS

21 SEC. 207. The Administrator shall annually notify the

22 Secretary of the Treasury and the treasurers of the several

23 States of the allotments made under this title, and shall
24 periodically notify the Secretary of the Treasury of the
25 amount payable, as a quarterly installment, to the treasurer
 14
1 of each State. The Secretary of the Treasury, after re­
2 ceiving such notice, shall pay such quarterly installment
3 to the treasurer -of each such State from the sums allotted
4 to it, unless the Administrator notifies him to withhold
5 payment of any instaliment, or to change the amount of
6 any allotment, in which case he shall act in accordance
7 with such notification: Provided, That no such installment
8 shall exceed the amounts expended by such State in the
9 quarter immediately preceding the payment of such install­
10 mnent for the purpose of carrying out the State plan for aid
11 to dependent children.
12 ACTION OF COMPTROLLER GENERAL

13 SEC. 208. The Comptroller General is authorized and

14 directed to allow credit in the accounts of the Treasury of

15 the United States for payment of allotments in the amount
16 notified him by the Administrator.
17 ADMINISTRATION

18 SEC. 209. From the moneys becoming available under

19 and/or in accordance with this title, not more than one-half

20 of 1 per centum may be expended by the Administrator
21 for all necessary expenditures, including the employment of
22 experts, assistants, clerks, and other persons in the District
23 of Columbia and elsewhere, the purchase of supplies, ma­
24 terial, equipment, office fixtures and apparatus, and in the
25 incurring of traveling and other expenses as the Admnims­
 15

1 trat~or may deem necessary to carry out the purposes of this

2 title. The Administrator shall include in his annual report

3 to Congress a full account of the administration of this title
4 and expenditures of the money herein authorized. The

5 President is authorized to transfer at any time, to any officer

6 or agency of the Government, the duties and powers con­

7 ferred upon the Administrator under this title.

8 INCLUSION OF TERRITORIES

9 SEC. 210. As used in this title, the term "State"

10 includes Alaska, Hawaii, Puerto Rico, and the District of

11 Columbia.
12 RULES AND REGULATIONS

1: SEC. 21 1. The Administrator is authorized to make all

14 rules and regulations necessary to effectuate the purposes

15 of this title.

16 TITLE mI
17 EARNINGS TAX

18 SECTION 301. Commencing on January 1, 1937, there

19 shall be levied and assessed upon every employee as de­

20 fined in this title an earnings tax, to be collected from and
21 paid by every employer subject to this title:
22 (1) As of January 1, 1937, the tax shall be at the
23 rate of one-half of 1 per centum. of the wages paid by such
24 employer to such employee.
 16
1 (2) As of January 1, 1942, the tax shall be at the
2 rate of 1 per centum. of the wages paid by such bmployer to
3 such employee.
4 (3) As of January 1, 1947, the tax shall be at the
5 rate of if per centum of the wages paid by such employer
6 to such employee.
7 (4) As of January 1, 1952, the tax shall be at the
8 rate of 2 per centumn of the wages paid by such employer
9 to sueh employee.
10 (5) As of January 1, 1957, the tax shall be at the
11 rate of 2-* per centum of the wages paid by such employer
12 to such employee.
13 The amount of such tax (but no part of the tax levied
14 under section 302) shall be deducted by the employer from

15 the wages of the employee.

16 EXPLOYM1ENT EXCISE TAX

17 SEC. 302. Comm ncing on January 1, 1937, there

1$ shalj be levied and assessed upon every employer as defined
19 hrf this title an employment excuise tax, to be collected from
20 &andpaid by every such employer:
21 (1) As of January 1, 1937, the tax shall be at the
22 rate of one-half of 1 per centum of the pay roll of such
23 employer.
24 (2) As of January 1, 1942, the tax shall be at the
25 rate of 1 per centum of the pay roll of such employer.
 17
I (3) As of January 1, 1947, the tax shall be at the
2rate of 1 1 per centum of the pay roll of such employer.
3 (4) As of January 1, 1952, the tax shall be at the
4 rate of 2 per centum of the pay roll of such employer.
5 (5) As of January 1, 1957, the tax shall be at the
6rate of 21 per centum. of the pay roll of such employer.

7 COLLECTION OF TAXES

8 SEC. 303. (a) The taxes provided for in this title shall
9 be collected by the Bureau of Internal Revenue under the
10 direction of the Secretary of the Treasury. Such taxes
11 shall be paid into the Treasury of the United States.
12 (b) All provisions of law, including penalties, ap­
13 plicable with respect to any tax imposed by section 600 or

14 section 800 of the Revenue Act of 1926, shall, insofar as

15 applicable and not inconsistent with the provisions of this
16 title, be applicable in regard to the taxes imposed by this

17 title.
18 RULES AND REGULATIONS

19 SEC. 304. The Commissioner of Internal Revenue,

20 with the approval of the Secretary of the Treasury, shall

21 prescribe and publish al needful rules and regulations for
22 the enforcement of this title, and in particular for­
23 (a) Collection and payment of the tax by stamps,

24 coupons, tickets, books, or such other reasonable device or

 is
1 method as may be necessary or helpful in securing a corn­

2 plete and proper collection of the tax and for regulating

3 the manner, times, and conditions in, at, and under which
4 the tax shall be collected and paid, including the making

5 and filing of returns and the affixing or other use of said

6 stamps, tickets, books, or other device or devices; and
7 (b) Issue, sale, custody, production, cancelation, and

8 disposition of such stamps, tickets, books, or other device

9 or devices, including the substitution or replacement thereof
10 in case of loss, destruction, or defacement.
11 SALE OF STAMPS BY POSTMASTERS

12 SEC. 305. The Commissioner of Internal Revenue shall

13 furnish to the Postmaster General without prepayment a

14 suitable quantity of adhesive stamps, issued or used for the

15 collection of any tax imposed by this title, to be distributed
16 to, and kept on sale by, the various postmasters in the
17 United States. The Postmaster General may require each
18 such postmaster to give additional or increased bond as
19 postmaster for the value of the stamps so furnished, and
20 each such postmaster shall deposit the receipts from the
21 sale of such stamps to the credit of and render accounts to
22 the Postmaster General at such times and in such form as
23 he may by regulations prescribe. The Postmaster General
24 shall at least once monthly transfer all collections from this
25 source to the Treasury as internal-revenue collections,
 19
1 PENALTIES

2 SEC. 306. (a) Except as provided in this title or in

3 regulations made pursuant thereto, every person who buys,

4 sells, offers for sale, transfers, takes, or gives in exchange,
5 or pledges or gives in pledge any stamp, coupon, ticket,
6 book, or other device prescribed by the Commissioner of
7 Internal Revenue for the collection of any tax imposed by

8 this title, shall be guilty of a misdemeanor and shall, upon

9 conviction thereof, be fined not more than $1,000 or sen­

10 tenced to not more than six months' imprisonment, or both.

11 (b) Any person who, with intent to defraud, alters,

12 forges, makes, or counterfeits any stamp, coupon, ticket,

13 book, or other device prescribed by the Commissioner of

14 Internal Revenue for the collection of any tax imposed by

15 this title, or who uses, sells, lends, or has in his possession
16 any such altered, forged, or counterfeited stamp, coupon,
17 ticket, book, or other device, or who makes, uses, sells, or
18 has in his possession any material in imcitation of the mate­
19 rial used in the manufacture of such stamp, coupon, ticket,

20 book, or other device, shall, upon conviction thereof, be

21 punished by a fine not exceeding $5,000 or by imprison­
22 ment not exceeding five years, or both.

23 DEFINITIONS

24 SEC. 307. When used in this title­

25 (1) The term " person " means an individual, a trust

26 or estate, a partnership, syndicate, group, pool, joint venture,
 20
1 or other unincorporated organization, or a corporation, asso­
2 ciation, joint stock company, or insurance company.
3 (2) The term '' domestic '', when applied to a cor­
4 poration or partnership, means created or organized in the
.5 United States or under the laws of the United States or 0f

61 any State or Territory.

7 (3) The term " foreign ", when applied to a, corpora­
8 tion or partnership, means a corporation or partnership
9 which is not domestic.
10 (4) The term " employer " shall include every person
11 who employs an employee, as defined in this title, except
12 that it shall not include the Federal Government, the States
13 or any political subdivision thereof, a governmental instru­
14 mentality, or any employer subject to the Railway Retire­
13 mient Act, including any amendments hereafter made to
16 such Act.
17 (5) The term " employee " shall include every
18 individual who on January 1, 1937, has not attained the

19 age of sixty years, and who receives wages under any con­
20 tract of employ~ment or hire, oral or written, express or
21 implied, and the greater part of whose duties under such
22 contract is performed within the continental United States
23 or on board a vessel subject to the jurisdiction of the United
24 States.

25 (6) The term " wages " shall mean the total of every
26 form of remuneration received by an employee from an
 21
1 employer, whether paid directly or indirectly by an em­
2 ployer, including salaries, commissions, bonuses, and the
3 reasonable money value of tent, housing, lodging, board
4 (except in the case of board, the total money value shall
5 not be included unless such total value is in excess of $1.0

6 for any calendar month), payments in kind, and similar

7 advantages,; but it shall not include any such remuneration

8 received by a nonmanual worker who is employed at a

9 monthly salary of more than $250 a month.

10 (7) The term " pay roll " means the total amount of
11 all wages paid by an employer subject to this title.
12 (8) The term " continental 'United States " means the
13 several States and the District of Columbia, and excludes

14 territories and possessions of the United States.

15 TITLE IV
16 SOCIAL INSURANCE BOARD

17 SECTION 401 (a). There is hereby established in the

18 Department of Labor a Social Insurance Board (hereinafter

19 referred to as the " Board ") to be composed of three mem­
20 bers to be appointed by the President. During his term of

21 membership on the Board, no member shall engage in any

22 other business, vocation, or employment. Each member

23 shall receive a. salary at the rate of $10,000 a year and shall

24 hold office for a term of six years, except that (1) any
25 member appointed to fill a vacancy occurring. prior to the
26 expiration of the term for which his predecessor was ap­
 22
1 pointed, shall be appointed for the reniainder of such term;
2 and (2) the terms of office of the members first taking office
3 after the date of enactment of this title shall expire, as
4 designated by the President at the time of appointment,
6 one at the end of two years, one at the end of four years and
6 one at the end of six years after the date of enactment of this
7 title. The President shall designate the chairman of the
8 Board.
9 (b) The Board is authorized, subject to the approval
10 of the Secretary of Labor, to appoint and fix the compensa­
11 tion of such officers, attorneys, and experts as may be neces­
12 sary for carrying out its functions under this Act, without
13 regard to the provisions of the civil-service laws and the
14 Classification Act of 1923, as amended, and, subject to the
15 civil-service laws, to appoint such other officers and em­
16 ployees as are necessary in the execution of its functions and
17 fix their salaries in accordance with the Classification Act
18 of 1923, as amended.
19 DUTIES OF SOCIAL INSURANCE BOARD

20 SEC. 402. The Social Insurance Board shall have,

21 among its duties, the duties of­
22 (a) Studying and making recommendations as to the
23 most effective methods of providing economic security
24 through social insurance, and as to legislation and matters of
25 administrative policy concerning old-age insurance, unem­
 23
1 ployment compensation, accident compensation, health in­

2 surance and related subjects;

8 (b) Examining and making recommendations to the

4 Secretary of Labor as to the allowance of credit under title

5 VI of this Act;
6 (c) Supervising and directing, as hereinafter provided,

7 the payment of old-age annuities under a national contribu­

8 tory old-age insurance system;

9 (d) Issuing old-age annuities, as provided in title V

10 of this Act;
11 (e) Assisting the States, in the manner hereinafter
12 provided, in the administration of unemployment compensa­
13 tion laws.
14 APPROPRIATION

15 SEC. 403. For the purposes of this title, there is hereby

16 appropriated from the funds in the Treasury not otherwise

17 appropriated (a) for the fiscal year ending June 30, 1936,
18 the sum of $5,000,000, and there is hereby authorized
19 to be appropriated for each fiscal year thereafter the sum
20 of $50,000,000, of which sums 98 per centum shall be
21 apportioned by the Board among the States as hereinafter
22- provided; and (b) the proceeds derived from all taxes
23 imposed under title III of this Act, to be allocated to the
21old-age fund established under this title.
 24
1 SEc. 404. (a) There is hereby established in the
2 Treasury a fund to be known as the "old-age fund ", to
3 be held and invested tinder the same terms and conditions

4 as the unemployment trust fund established under title VI

5 of this Act; and the Secretary of the Treasury is hereby

6 authorized and directed so to manage such fund.

7 (b) The Social Insurance Board shall, from time to
R time, requisition from such fund the amounts necessary for
9 the making of all payments under section 405 of this Act,
10 and shall annually cause to be made, and transmitted to the
11 Secretary of the Treasury in the form of a formal instrument,

12 actuarial valuations of the future income and future expendi­

13 tures of the old-age fund, which shall show the future obliga­
14 tions of the Government under this title.
15 PAYMENT OF OLD-AGE ANNUITIES

16 Sim. 405. (a) On and after January 1, 1942, the

17 Board shall requisition from the old-age fund and cause to

18 be paid, to qualified aged persons, old-age annuities out of

19 the sums appropriated under subsection (b) of section 403
20 of this Act. No person shall receive such old-age annuity
21 unless
22 (1) At the time when it is paid to him, he is
23 not less than sixty-five years of age; and
24 (2) Taxes were paid on his behalf under section

25 301 of this Act, prior to the day when he attained the

26 age of sixty years; and
 26
1 (3) Taxes were paid on his behalf, under section

2 301 of this Act, for at least two hundred different weeks

3 in not less than a five-year period entirely prior to his
4 attaining the age of sixty-five years; and

5 (4) He is not employed by another in a gainful

6 occupation.
7 (b) Any person qualified to receive an old-age an­
8 nuity shall, upon complying with all rules and regulations
9 to be prescribed by the Secretary of Labor and reasonably
10 designed to facilitate the just and prompt payment of such
11 annuities, be entitled to receive once in each month, com­
12 mencing not earlier than January 1, 1942, a monthly
13 installment of such annuity in the amount and under the
14 conditions hereinafter prescribed, as follows:
15 (1) A person on whose behalf taxes were paid

16 under section 301 of this Act prior to January 1, 1942,

17 and prior to such person attaining the age of sixty-five
18 years, shall receive as his monthly installment an

19 amount equal to a percentage of his average monthly

20 wage. If taxes were paid on his behalf
21 (A) In two hundred different weeks (in not
22 less than five years), such percentage shall be
23 15 per centum. of such wage;
24 (B) For each forty different weeks (prior to
25 his attaining the age of sixty-five years) over such
26 two hundred weeks, up to an additional two hufi­
 26

1 dred weeks, there shall be added to such percent­

2 age 1 per centum, except that such addition shall

S not exceed 1 per centum for the twelve-month

4 period commencing at the end of the original two

5 hundred weeks or the original five-year period,

6 whichever ends later, and for each twelve-month

7 period thereafter;

8 (C) For each forty different weeks (prior to

9 his attaining the age of sixty-five years) over such

10 aggregate of four hundred weeks, up to an addi­

11 tional four hundred weeks, there shall be a fur­

12 ther addition of 2 per centum, except that such

13 addition shall not exceed 2 per centum for the

14 twelve-month period commencing at the end of

15 the additional two hundred weeks or the fifth of

16 the twelve-month periods under (B), whichever

17 ends later, and for each twelve-month period

,18 thereafter. If in the five years under (A) such

19 taxes were paid in more than two hundred weeks,

20 such excess weeks over two hundred shall be

21 counted toward the additional two hundred weeks

22 under (B) ; and if in the five twelve-month

23 periods under (B) such taxes were or are counted

24 as having been paid in more than two hundred

25 weeks, such excess weeks over two hundred shall
 27?
1 be counted toward the additional four hundred
2 weeks under (C).
3 (2) A person on whose behalf such taxes were paid
4 only after January 1, 1942, shall receive as his monthly
5 installment, an amount equal to 10 per centum of his
6 average monthly wage plus 1 per centum of such wage
7 for each forty different weeks (prior to his attaining
8 the age of sixty-five years) over the original two
9 hundred (in not less than a five-year period) in which
10 such taxes were paid, except that such addition shall
11 not exceed 1 per centum for the twelve-month period
12 commencing at the end of the original two hundred
13 weeks or the original five-year period, whichever ends
14 later, and for each twelve-month period thereafter. If
15 in the original five-year period such taxes were paid in
16 more than two hundred weeks, taxes paid in such excess
17 weeks over two hundred shall be deemed to have been
18 paid in a subsequent twelve-month period.
19 (3) Any person entitled to the payment of any
20 installment under either paragraph (1) or (2) of this
21 subsection, may, if such person has a dependent spouse,
22 elect to receive a joint survivorship, annuity of identical
23 actuarial value in lieu of the annuity provided under
24 either of such paragraphs, under such rules and regu­
25 lations as the Social Insurance Board shall prescribe.
 28
1 (4) In no event shall the actuarial value of an

2 annuity paid to a person under this section be less thani

3 the amount paid in taxes on his behalf together with
4 interest accretions as determined by the Social Instir­

5 ance Board.
6 (5) As used in this section " average monthly
7 wage " shall mean the total amount of wages upon

8 which taxes were paid under section 301 of this Act on

9 behalf of the employee and prior to his attaining the
10 age of sixty-five years, such amount to be divided by
11 the number of months in which such taxes were paid,

12 except that such average monthly wage shall not exceed

13 $150. For the purpose of calculating the average

14 monthly wage, the Social Insurance Board shall adjust

15 the various lengths of th'e periods for which wages
16 were paid to a monthly basis.
17 (c) If any person on whose behalf taxes have been
18 paid under section 301 of this Act dies before receiving any
19 benefits, or before receiving in benefits an amount equal

20 to the total amount of such taxes paid on his behalf, with

21 interest accretions prior to the date of first receiving an
22 annuity as determined by the Social Insurance Board, there,
23 shall be paid to his legal and/or actual dependents an
24 amount equal to the difference between such amount of
 29
1 taxes together with such interest accretions and the benefits

2 he has received.
3 (d) Any person upon whose behalf taxes were paid
4 under section 301 of this Act, who upon reaching the age

5 of sixty-five is not entitled to benefits, may thereafter claim

6 from the Social Insurance Board an amount equal to the

7 amount of such tax payments, and the Social Insurance

8 Board shall pay him such amount, together with interest

9 accretions as determined by such Board. No person who
10 thus claims and receives any amount under this section
11 shall thereafter be entitled to aii old-age annuity or any
12 installment thereof.
13 ALLOTMENTS TO STATES FOR UNEMPLOYMENT COMPENSA­

I TION ADMINISTRATION

lb SEC. 406. The Board shall periodically, make allot­

16 ments, in a total amount of not more than $4,000,000 in
17 the fiscal year ending June 30, 1936, and thereafter not
18G more than $49,000,000 in each year, to those States which
1I have unemployment compensation laws requiring contribu­

20 tions for which credits against tax are allowed under title VI
21 of this Act. The total a-mount, or so much thereof as the
22 Board deems necessary, allocated under this sectior shall be
23 apportioned among such States on the basis of need for such
24 financial assistance in the proper administration of such laws.
 30
1 CONDITIONS OF UNEMPLOYMENT COMPENSATION ADMINIS­

2 TRATION ALLOTMENTS

30 SEC. 407. (a) No allotment shall be made or install­

4 ment paid to a State, under section 406 of this Act, unless
a and until the Board has made a finding of fact and has
6 certified the same to the Secretary of Labor and the
7 Secretary of the Treasury, that­
8 (1) All positions in the administration of the
9 unemployment compensation law of such State are filled
10 by persons appointed on a nonpartisan basis, and
11 selected on the basis of merit under rules and regula­
12 tions prescribed or approved by the Board; and
13 (2) Administrative regulations and practices are
14 reasonably calculated to insure full payment of unem­
15 ployment compensation when due; and
16 (3) Unemployment compensation is paid as a
17 matter of right and in accordance with the terms of
18 the State unemployment compensation law to all per­
19 sons eligible thereto under such law, and that all
20 persons whose claims for compensation are denied are
21 given a fair hearing, before an impartial tribunal; and
22 (4) All such unemployment compensation is
23 paid through public employment offices of the State;
24 and
 31
1 (5) All of the money raised by contributions
2 of employers and employees under such State law is
3 deposited upon collection to become a part of the
4 unemployment trust fund established under title VI
5 of this Act, and, upon being requisitioned, is expended

6 solely in the payment of unemployment compensation;

7 and
8 (6) The State agency charged with the ad­
9 ministration of the unemployment compensation law

10 makes, upon request, full and complete reports to the

11 Social Insurance Board relating to the effect and ad­

12) ministration of such law, on forms to be prescribed

13 by the Board, and makes available upon request to

14 any agency of the U~nited States charged with the
15 administration of public works or other assistance
1(6 through public employment, the names and addresses
17 and ordinary occupation of each recipient of unem­
ii s ployment compensation and the date when such re­
1 9 cipient received the last regular payment of compen­
2() sation to which he was entitled under the State law.
21 (b) Payment of any installment to a State to which an
22 allotment has been made shall be withheld if the Board
23 reverses the previous finding made by it under this section,
24 and notifies the Secretary of the Treasury and the treasurer
 32

1 of the affected State of such reversal and the reason or rea­

2 sons therefor. The amounts thus withheld in any fiscal
3 year shall be added to the total amount from which allot­
4 ments are made in the next fiscal year.
5 NOTIFICATION

6 SEC. 408. The Board shall, as soon as possible after

7 the commencement of the fiscal year, notify the Secretary

8 of the Treasury, and the treasurers of the several States of
9 the States to which allotments for that fiscal year have been
10 made under this title, and of the sums allotted. The Sec­
11 retary of the Treasury shall thereupon pay in monthly in­
12 stallinents to the treasurer of each such State the sums
13 allotted to it, unless the Board notifies him to withhold
14 payment of any installment or to change the amount of any
15 allotment, in which case he shall act in accordance with such
16 notification.
17 ACTION OF COMPTROLLER GENERAL

18 SEC. 409. The Comptroller General is authorized and

19 directed to allow credit in the accounts of the Treasury of
20 the United States for payment of allotments in the amount
21 notified him by the Board.
22 TITLE V
23 ANNUITY CERTIFICATES

24 SECTION 501. The Social Insurance Board is author­

25 ized to borrow from time to time, on the credit of the United
 33
1 States, for the purpose of increasing the old-age fund esta-b­
2 lished under this Act, such sum or sums as in its judgment
3 may be desirable, and to issue therefor, at such prices and
4 upon such terms and conditions as it may determine, annuity
5 certificates: Provided, That no such certificate shall be issued

6 except to United States citizens: And provided further,

7 That there shall not be issued to an individual a certificate
8 or certificates for loins which would amnount,7 with interest

9 accretions, to more than an annuity of $100 a month after

10 such individual attained the age of sixty-five years,
ii FOR AND CONDITIONS OF CERTIFICATES

12 SEC. 502. Each annuity certificate issued under this

13') title shall be in such form and subject to such terms and

14 conditions, and may bear such interest and have such pro­
15 visions for payment, as the Social Insurance Board inay
16 prescribe: Provided, That payment of interest may be de­
17 ferred and payment of principal and interest to persons to
IS whom such certificates have been issued may be madc in

19 monthly installments.
20 ISSUANCE OF STAMPS

21 SEC. 503. The Board may, under such regulations and

22 upon such terms and conditions as it may prescribe, issue,

23 or cause to be issued, stamps to evidence payments for, or

24 on account of, such certificates.
 34
I DEPOSITS IN OLD-AGE FUND

'2 SEC. 504. All moneys borrowed under this title shall

3 be deposited by the Board in the old-age fund established

4 under section 404 of this Act, to be held and used by the
5 Secretary of the Treasury as part of such fund. The Board
6 shall requisition from such fund from time to time all amounts
7 needed to meet promptly all obligations of the United States

8 arising out of annuity certificates.

9 RUJLES AND REGULATIONS

10 SEC. 505. The Social Insurance Board shall make all

11 rules and regulations necessary to carry out the purposes of

12 this title.
13 TITLE VI
14 IMPOSITION OF TAX

15 SECTION 601. There shall be levied, assessed, and

16 collected annually from every employer subject to this title,
17 for the taxable year commencing January 1, 1936, and for
18 each taxable year thereafter an excise tax, measured by an
19 amount equal to 3 per centumn of such employer's pay roll:
20 Provided, That

21 (a) If -the IFederal Reserve Board's adjusted index of

22 total industrial production averages, for the year ending
23 September 30, 1935, not more than 84 per centum of its
24 average for the years 1923-25, inclusive, the Governor of
25 the Federal Reserve Board shall certify that fact to the
 35
1 Secretary of the Treasury and to Congress, and the tax
2 imposed under this section shall, for the taxable year coin­
3 mencing January 1, 1936, be measured by an amount equal
4 to 1 per centum of such employer's pay roll;
5 (b) If such index averages, for such year, more than

6 84 per centum but less than 95 per centumn of such earlier

7 average, such fact shall be so certified, and the tax imposed
8 under this section shall, for the taxable year commencing

9 January 1, 1936, be measured by an amount equal to 2

10 per centuin of such employer's pay roll;
11 (c) If such index averages, for the year ending
12 September 30, 1936, not more than 84 per centumn of such
13 earlier average, such fact shall be so certified, and the tax

14 imposed under this section shall, for the taxable year comn­
15 mencing January 1, 1937, be measured by an amount equal
16 to 1 per centunm of such employer's pay roll, except that in

17 no event shall the measure of tax for the taxable year com­
18 mencing January 1, 1937, be less than the measure of tax
19 for the taxabic year commencing January 1, 1936;
20 (d) If such index averages, for the year ending
21 September 30, 1936, more than 84 per centunm but less than
22 95 per centum of such earlier average, such fact shall be so
23 certified, and the tax imposed under this section shall for
24 the taxable year commencing January 1, 1937, be meas­

25 ured-by an amount equal to 2 per centumn of such -employer's

 86
1 pay roll, except that in no event shall the measure of tax
2 for the taxable year commencing January 1, 1937, be less
3 than the measure of tax for the taxable year commencing
4 January 1, 1936.
5 ALLOWABLE CREDIT

6 SEC. 602. Any employer may credit against the tax

7 thus due, up to 90 per centum of the tax, the amount of his
8 contributions for the taxable quarter to any unemployment
9 fund under any State law: Provided, That the Secretary of
10 Labor has, in the month of December in the taxable. year,
11 made a finding of fact and certified to the Secretary of the
12 Treasury that­
13 (a) The State by whose law such contributions were
14 required has accepted the provisions of the Act of June 6,
15 1933 (U. S. C., title 29, sec. 49 (c) ; 48 Stat. 113)
16 (b) Payment of all compensation is made and/or is
17 to be made through the public employment offices in such
18 State, and commences under such State law two years after
19 contributions are first made under such law;
20 (c) The State agency of such State, to safeguard the
21 money paid as contributions and to assist in maintaining
22 the stability of industry and employment, deposits all such
23 money, or causes it to be deposited, immediately upon its
24 being paid as contributions, in the unemployment trust fund,
25 or in a bank or banks designated as agents of such trust
 37

1 fund to be held as part of such trust fund, in accordance

2 with section 604 of this Act;
3 (d) None of the money requisitioned by such State
4 agency, in accordance with section 604 of this Act, has

5 been used for any purpose except the payment of corn­

6 pensation;
7 (e) Compensation is not denied -in such State to

8 otherwise eligible employees for refusing to accept new

9 work under any of the following conditions: (1) If the

10 position offered is vacant due directly to a strike, lockout,

11 or other labor disputes; (2) if the wages, hours, and other

12 conditions of the work offered are substantially less favor­

13 able to the employee than those prevailing for similar work

14 in the locality; (3) if acceptance of such employment would

15 either require the employee to join a company union or
16 would interfere with his joining or retaining membership
17 in any bona. flde labor organization;
18 (f) The State law includes provisions which permit
19 modification thereof at the will of the legislature or which

20 prevent the creation of vested rights against modification

21 or repeal of such law at any time.

22 FINDINGS OF FACT

23 SEC. 603. In December 1935 the Secretary of Labor

24 shall notify the Secretary of the Treasury and the treas­

25 urers of the several States of the names of those States
 38

1 having State laws which, if faithfully execulted, may entitle

2 employers to credit for contributions ma;de under such laws

3 111 the taxable year commencing January 1, 1936. Annually

4 thereafter the Secretary of Labor shall make findings of

5 fact and certifications to the Secretary of the Treasury, as

6 provided in section 602 of this Act, as to compliance by

7 the States with the conditions of subsections (a) to (f)

8 inclusive, of section 602, and shall notify the treasurers

9 of the several States of the names of those States which hie
10 finds to comply with such subsections.

11 UNEMPLOYMENT TRUST FUND

12 SEC. 604. (a) There is hereby established in the

1.3 Treasury a trust fund to be known as the " Unemployment

14 trust fund." The Secretary -of the Treasury is authorized

15 and directed to receive and hold in this fund any and all

16 moneys delivered in accordance with section 602 of this

17 Act by any State agency to him at the Treasury or at any
18 bank designated by him for the purpose, and to receive and
19 hold the income derived therefrom. The fund or any part

20 thereof may be invested or reinvested in any primary obliga­

21 tions of the United States or in any obligations guaranteed
22 as to both principal and interest by the United States; and
23 such obligations may be acquired by purchase of outstanding
24 obligations at the market price thereof or on original issue at
25 par. Obligations acquired by the fund on original issue,
 39
1 which are issued exclusively to the fund, shall bear interest

2 at a rate equal (after adjustment to the next lower multiple

3of one-eighth of 1 per centum) to the average rate of interest
4payable at the time of such acquisition upon all primary
5 obligations of the United States (other than obligations
6 issued directly to the fund) then forming part of the public

7 debt. Every other obligation acquired for the fund shall be

8 acquired on such terms as to provide an effective investment
9 yield which shall not be le~ss, by more than one-eighth of 1
10 per centum, than such average rate. It shall be the duty of

11 the Secretary of the Treasury to invest as herein provided

12 such portion of the fund as is not, in his judgment, required
13 to meet current withdrawals. The purposes for which obli­
14 gations of the United States may be issued under the Second
15 Liberty Bond Act, as amended, are hereby extended to

16 authorize the issuance thereof to the fund for the sole purpose
17 of providing it with suitable investments at such interest

I18 rates as may he required for the purposes of this section,

I19 notwithstanding the availability in the market of obligations

20 of the U~nited States bearing the same or different interest

21 rates; and to an amount not in excess of the face amount,
22 from time to time outstanding, of obligations originally issued
23 to the fund, the Secretary of the Treasury is authorized i-E
24 his discretion and on the basis of fair market values to invest
295 and reinvest in, and to sell (or, in the case of primary obliga­
 40
i tions of the United States, to cancel) any obligations of a
2 kind in which he is authorized to invest the fund, but without
3 limitation as to interest rate. Obligations so acquired shall
4 be held in a special account. All purchases, retirements, and
b sales under this section shall be deemed to be public debt
(3 transactions.
7 (b) Each State agency shall have an undivided interest
8 in the fund, but the Secretary of the Treasury shall maintain
9 a separate book account for each such State agency, and shall
10 credit quarterly on March 31, June 30, September 30, and
11 December 31, to each such account a proportionate part of
12 the earnings of the fund for the preceding quarter, on the
13 basis of the average daily balance of such account.
14 (c) The Secretary of the Treasury is authorized and
1,5 directed to pay out of the fund to any State agency such part
16 of the money held in trust for it, as may be duly requisi­
17 tioned in accordance with the terms of this Act. Whenever
18 in order to make any such payment it is necessary to dispose
19 of any obligations held in the fund, the Secretary of the
20 Treasury is authorized to sell such obligations on the market,
21 or to acquire such obligations for the account of the United
22 States at the market price thereof: Provided, That obliga,
23 tions originally issued to the fund shall be so acquired for
24 the account of the United States at par plus accrued interest,
 41
1 (d) The Secretary of the Treasury is hereby authorized
2 to appoint any one or more of the Federal Reserve or
3 national banks as his agents, on such terms and conditions
4 as he may prescribe, to bold and have custody of the fund
5 or any part thereof, and such banks are hereby authorized
6 to act as such agents.
7 ADMINISTRATION, REFUNDS, AND PENALTIES

8 Sim. 605. (a) The Commissioner of internal Revenue,

9 with the approval of the Secretary of the Treasury, shall
10 prescribe and publish necessary rules and regulations for the
11 enforcement of the provisions of this title.
12 (b) Every employer liable for tax under this title shall
13 make a return under oath within one month after the close
14 of the year with respect to which such tax is imposed to
15 the collector of internal revenue for the district in which
16 is located his principal place of business. Such return shall
17 contain such information and made in such manner,, as the
18 Commissioner of Internal Revenue with the approval of the
19 Secretary of the Treasury may by regulations prescribe.
20 The tax shall, without assessment by the Commissioner or
21 notice from the collector, be due and payable to the collector
22 within one month after the close of the year with respect to
23 which the tax is imposed. If the tax is not paid when due,
24 there shall be added as part of the tax interest at the rate
25 of 1 per centum a month from the time when the tax became
 42
1 due until paid. All provision of law (including penalties)
2 applicable in respect of the taxes imposed by section 600 of
3 the Revenue Act of 1926, shall, insofar as not inconsistent
4 with this Act, be applicable in respect of the tax imposed

5 by this Act. The Commissioner- may extend the time for

6 ifiling the return of the tax imposed by this Act, under such
7 rules and regulations as fie may prescribe with the approval

8 of the Secretary of the Treasury, but no such extension shall

9 be for more than sixty days.

10 (c) Returns required to be filed for the purpose of the

11 tax imposed by this Act shall be open to inspection in the
12 same manner, to the same extent, and subject to the same
1.3 provisions of law as returns made under title II of the

i14 Revenue Act of 1926.

15 (d) The taxpayer may elect to pay the tax in four

16 equal installments, in which case the first installment shall
17 be paid on the date prescribed for the filing of returns, the
18 second installment shall be paid on or before the last day
19, of the third month, the third installment on or before the

20 last day of the sixth month, and the fourth installment on

21 or before the last day of the ninth month, after such day.
22 If any installment is not paid on or before the date fixed
23 for its payment, the whole amount of the tax unpaid shall
24 he paid upon notice and demand from the collector.
 43
1 (e) At the request of the taxpayer the time for
2 payment of any initial installment of the amount determined
3 as the tax by the taxpayer may be extended under regula­

4 tions prescribed by the Conumissioner with the approval

5 of the Secretary of the Treasury, for a period not to exceed

6 six months from the date prescribed for the payment of such
7 installment. In such case the amount in respect of which
8 the extension is granted shall be paid (with interest at the
9 rate of one-half of 1 per centum per month) on or before

10 the date of the expiration of the period of the extension.

11 DEFINITIONS

12 SuE,. 606. When used in this title the term " Em­
13 ployer " shall mean any person, partnership, association,

14 corporation, whether domestic or foreign, or the legal rep­

15 resentative, trustee in bankruptcy, receiver, or trustee
16 thereof, or the legal representative of a deceased person,,
17 who or whose agent or predecessor in interest has, within
18 each of thirteen or more calendar weeks in, the taxable
19 year, employed at. least four persons in employment subject
20 to this title, except that the term " employer " shall not
21 include the Federal Government, the governments of the
22 several States, municipal corporations, or other govern­
23 niental instrumentalities. In determining whether an em­
24 ployer employs enough persons to be an " employer " sub­
25 ject hereto, and determnining for what tax he is liable here­
 44X­

1under, he shall whenever he contracts with any subcon­

2 tractor for any work which is part of his usual trade, occu­
a pation, profession, or business, be deemed to employ all

4 persons employed by such subcontractor on such work,

5 and he alone shall be liable for the tax measured by wages

a paid to such persons for such work; except as any such

7 subcontractor, who would in the absence of the foregoing

8 provision be liable to pay said tax, accepts exclusive liability

9 for said tax under an agreement with such employer made

10 pursuant to regulations promulgated by the Commissioner of

11 Internal Revenue with the approval of the Secretary of the

12 Treasury.
13 " Employment " shall mean any employment in which

14 substantially all of the person's work is, or was, performed

1,5 within the continental United States under any contract
16 of hire, oral or written, express or implied, whether such
17 person was hired and paid directly by the employer or
18 through any other person employed by the employer,
19 provided the employer had actual or constructive knowledge

20 of such contract; except that for thi purposes of this title

21 it shall not include any employment included in any unem­
22 ployment compensation system (other than for the District
23 of Columbia) established by an Act of Congress.
24 " Wages " shall mean every form of remuneration for
25 employment received by a person from his employer,
 45
1whether paid directly' or indirectly by the employer, includ­
2 ing salaries, commissions, bonuses, and the reasonable money
3 value of board, rent, housing, lodging, payments in kind,
4 and similar advantages.
5 " Pay 'roll" shall mean the total amount of all wages
6 paid by the employer during the taxable year to persons em­
7 ployed by him in employment subject to this Act.
8 "State " shall include the District of Columbia..
9 "State law" shall mean a statute enacted by any
10 one of the several States which provides for systematic
11 compensation and the creation of an unemployment fund
12 under the direction of a State agency, requires contribu­
13 tions from employers, whether or not they are national
14 banks, and whether or not they are engaged in interstate
15 commerce, except insofar as they are included in any un­
16 employment compensation system (other than one for the
17 District of Columbia) established by Act of Congress, and
18 which may require that employees and/or the State also
19 contribute.
20 " Contributions " shall mean the amount which the
21 employer has duly paid, as required by a State law, in and
22 for the taxable year, into an unemployment fund.
23 "Unemployment fund " shall mean a special fund,
24 established under a State law, and administered by a State
25 agency in trust for the payment of compensation, and shall
 46
1 include so much of such fund as is administered as a pooled
2 fund (which shall never be less, except insofar as it may
3 be diminished by payment of compensation, than the amount
4 raised by contributions measured by 1 per centumn of pay
5 roll) and so much, if any, for which the State agency main­
6 tains separate accounts for individual employers or groups
7 of employers who are required to make contributions.
8 " State agency " shall mean any State officer, board, or
9 other authority designated, under a State law, to direct
10 the administration of an unemployment fund in such State.
11 " Pooled fund " shall mean an unemployment fund or
12 any part thereof in which all contributions are mingled and
13 undivided, and from which compensation is. payable to all
14 eligible employees, except that it is payable to persons em.­
15 ployed by employers for whom individual or group reserve
16 accounts are maintained by the State agency only when
17 such accounts, and any other liability of employers for
18 compensation, are exhausted.
19 " Reserve account " shall mean a separate account,
20 maintained by a State agency, of contributions paid by
21 an employer or group of employers, from which compensa­
22 tion is payable to the employees of such employer or group
23 unless such account is exhausted.
24 " Guaranteed employment account " shall mean a
25 separate -account, maintained by a State agency, of con­
 47
1 tributions paid by an employer or group of employers who

2 guarantee full wages, for not less than forty weeks in each
3 taxable year to all of their employees, or all of their em­
4 ployees in any plant or plants operated by such employer

5 or group, and give adequate guarantees for the payment

6 thereof as prescribed by the State law, from which account
7 may be payable compensation to each such employee if

8 his guarantee is not renewed and he is otherwise eligible

9 for benefits under such law.

10 " Compensation " shall mean the cash benefits payable

11 under a compulsory State law to employees for their un­

12 employment.
13 " Employee" as used in this title, shall mean any

14 employed person who is covered by a State law and/or

15 may become eligible for compensation thereunder.

16 " Tax " shall mean the gross tax imposed on the em­
17 ployer for the taxable year under section 601 of this Act,
18 except that when it is used in section 605 " tax " shall mean

19 the said gross tax minus any amounts credited in accord­

20 ance -with sections 602 and 607 of this Act.
21 " Taxable year " shall mean the year from January 1

22 to December 31, inclusive, or any portion of such year.

23 ALLOWANCE OF ADDITIONAL CREDITS

24 SEC. 607. Any employer qualifying under section 608

25 of this Act, who has made contributions and has reduced
 48
1 them under a State law which initially required uniform
2 contributions from all employers making contributions, and
3 which thereafter allows certain employers to reduce their
4 contributions may, for any taxable year thereafter, credit
5 against the tax an amount in addition to the credit allowed
6 under section 602 of this Act, except that in no instance
7 shall an employer's total credits under this Act exceed 90
8 per centum. of his tax. The additional credit under this
9 section shall be equal to the difference between (a) the
10 amount of contributions (measured by his pay roll attribu­
11 table to such State), actually required of and duly paid by
12 such employer for such year under such law, and (b) the
13 amount of such contributions which he would have been
14 required to make under such law for such year at the highest
15 rate then applicable to any employer or employers required
16 to contribute under such law.
17 CONDITIONS OF ADDITIONAL CREDIT ALLOWANCE

18 SEC. 608. No additional credit shall be allowed under

19 section 607 of this Act except to an employer who­

20 (a) Has, since contributions were first required of
21 him under such law, made contributions, and is required
22 to continue to contribute to a pooled fund in the State
23 whose law allows the reduction for which such credit is
24 claimed at a rate of at least 1 per centumn of his pay roll
25 attributable to such State;
 49
1 (b) If he is permiitted to reduce or cease his contri­
2 butions to a reserve account, (1) under a State law, re­
3 quiring the State agency to maintain reserve accounts for
4 each employer or group of employers making contributions, he
5 is allo-wed to do so only when the benefits payable from

6 such reserve account have not been scaled down during the
7 taxable year because of the inadequacy of such reserve

8 account and only when such reserve account amounts to

9 not less than 15 per centum of the total pay roll (attribut­
10 able to such State) of such employer or group during the
11 taxable year; or (2) under a State law permitting the State
12 agency to maintain reserve accounts for some employers, or
13 groups of employers, is allowed to do so only when such

14 employers or groups have guaranteed the full payment of

15 compensation to their employees regardless of the ade­
16 quacy of their reserve accounts, and only when such reserve
17 account amounts to not less than 15 per centum. of the total
18 pay roll (attributable t~o such State) of such employer or

19 group during the taxable year;

20 (c) If he is pcrmitted to contribute at a~reduced rate
21 as to contributions measured by the guaranteed wages paid
22 in such State, is allowed to do so only if the State agency
23 maintains a separate guaranteed employment account for
24 him individually or as one of a group of employers, and
25 onily if lie or such group has fulfilled his or its guaranty,
 50
1 and only when the amount credited in such guaranteed

2employment account amounts to not less than 71 per centum

3 of so much of the total pay roll of such employer group

4 for the taxable year as represents the wages guaranteed

5 under such law by such employer or group;

6 (d) If he is permitted to contribute at a reduced rate

7 (but not at a rate of less than 1 per centum of pay roll at­

8 tributable to such State) to a pooled fund, is allowed to

9 do so if the State law permits contributions to a pooled

10 fund (over and above 1 per centurm of such pay roll) to

11 be made at varying rates: Provided, That such variations
12 are not allowed within five years after contributions are
13 first paid under such law, and then are allowed only on a

14 basis of unemployment compensation experience.

15 TITLE VIII
16 MATERNAL AND) CHILD HEALTH

17 SECTION 701. (a) In order to enable the Federal

18 Government to cooperate with the State agencies of health
19 in extending and strengthening services for the health of
20 mothers and children, especially in rural areas and in areas
21 suffering from severe economic distress, there is hereby ap­
22 propriated the sum of $4,000,000 from funds in the Treas­
23 ury not otherwise appropriated, for the fiscal year ending
24 June 30, 1936, and there is hereby authorized to be appro­
 ,51
1 priated for each fiscal year thereafter, the sum of $4,000,000.
2 From these amounts so much, not to exceed 5 per centum.,
3 as the Children's Bureau shall find to be necessary for ad­
4 ministering the provisions of this section and for investiga­
5 tions and reports related thereto, shall be deducted annually

6 for this purpose, to be available until expended. The re­

7 mainder shall be allocated for furthering and strengthening

8 State and local health services to mothers and children,

9 extending maternity nursing services in counties predomi­

10 nantly rural, and conducting special demonstration and re­

11 search in maternal care and other aspects of maternal and
12 child health service. For each fiscal year, allocations of
13 the appropriations herein authorized shall be as follows:

14 (1) For furthering and extending maternal and

15 child health and maternity nursing services, the Secre­
16 tary of Labor shall allot $20,000 to each State and
17 apportion $1,000,000 among the States in the propor­
18 tion which the number of live births in each State bears
19 to the total number of live births in the United States
20 as determined annually by the latest available statistics
21 for the United States Birth Registration Area: Pro­
22 ?7ided, That no allotment, made to a State under this
23 paragraph shall exceed the sum of the amount made
241 available by the State for the purposes of this paragraph
 52

1 and the amount allotted to it uinder paragraph (2) of

2 this section;
3 (2) The Secretary of Labor shall apportioii
4 among States unable, because of severe economic dis­

5 tress, to match by themselves in full the amounts made

6 available under paragraph (1), for their use in match­

7 ing such sums $800,000;

8 (3) The Secretary of Labor shall. allocate the

9 remainder for special demonstrations and research in
10 maternal care in rural areas, and in other aspects of
11 maternal And child health.

12 (b) The sums provided under paragraphs (2) and

13 (3) of subsection (a) of this section shall be available until

14~ the close of the succeeding fiscal year. So much of the

15 amount apportioned under paragraph (1) to any State for
16 any fiscal year as remains unpaid to such State at the close
17 thereof shall be available until the close of the succeeding
18 fiscal year for expenditures in that State, tinder the conditions
19 specified in paragraph (1), or if not requested by the State
20 agency of health, for apportionment among States as pro­
21 v'ided in paragraph (2).
22 (c) In order to receive the benefits of paragraphs
23 (1) and. (2) of subsection (a) of this section, a State
'24 shall, through its State agency of health, submit to the
 53

1 Children's Bureau detailed plans for effectuating the pur­

2 poses of this section within such State and information con­

3 cerning the amounts made available by the State for such

4 purposes, which, unless exceptional circumstances can be

5 shown, must at least equal the amounts available for similar

6 purposes at the time of the passage of this Act; and if an

7 allocation under subsection (a) paragraph (2) is requested,
8 the conditions leading to such a reqhuest. A State plan
9 must include reasonable provision for State administrative

10 and supervisory services, for furthering local maternal and

11 child-health services administered by local public-health

12 units for State financial participation, and for cooperation
13 with medical, nursing, and welfare groups and organiza­
14 tions; and must give due consideration to the development

15 of demonstration services or services of a more permanent

16 character in rural and other needy areas or among groups

17 of the population in special need. When the Chief of the

18 Children's Bureau deems a State plan and the administra­

19 tion thereof to be in reasonable conformity with the pro­
20 visions of this section and in accordance with accepted stand­
21 ards of public-health practice developed by Federal Bureaus

22 and other agencies, he, shall approve the same and send
23 due notice of such approval to the Secretary of Labor and
24 the State agency concerned.
 54
1 CARE OF CRIPPLED CIULDREN

2 SEC. 702. (a) In order to enable the Federal Govern­

-3 ment to cooperate with the State agencies concerned with
4 the provision of medical care and other services for crippled
5 children, especially in rural areas, there is hereby appro­
63 priated for the fiscal year ending June 30, 1936, from funds
7 in the Treasury not otherwise appropriated, the sum of
8 $3,000,000, and for each fiscal year thereafter there is
9 authorized to be appropriated $3,000,000. From this
10 amount so much, not to exceed 5 per centum, as the Child­
11I ren's Bureau shall find to be necessary for administering
12 the provisions of this section and for investigations and
13 reports related thereto, shall be deducted annually for this
14 purpose to be available until expended. The remainder
15 shall be allotted to States for purposes of locating crippled
10 children, and of providing facilities for diagnosis and care,
17 hospitalization, and after. care, especially for children living
18 in rural areas. For each fiscal year the Secretary of Labor
19 shall allot $20,000 to each State and apportion the re­
20 mainder among the States on the basis of need as set forth
21 in plans developed by the State agencies concerned and
22 approved by the Children's Bureau: Provided, That except
23 in the case of severe economic distress or other exceptional
24 circumstance, no allotment under this subsection shall
 55

1 exceed the sum made available by the State for the purposes

2 of this section.
3 (b) In order to receive the benefits of this section a
4 State must, through an authorized State agency concerned
5 with the provision of medical care and other services for

6 crippled children, submit to the Children's Bureau a detailed

7 plan for effectuating the purposes of this section within such

8 State, and information concerning the amounts made avail­

9 able by the State for the purposes of this section, which
10 should at least equal the amounts made available for similar
11 purposes during the fiscal year next preceding the passage

12 of this Act, unless exceptional circumstances can be shown;

13 and if an allocation in addition to the original allotment of

14 $20,000 is requested, the conditions leading to such a

15 request. A State plan mast include reasonable provision
16 for State administration, adequate facilities for locating and

17 diagnosing children, adequate medical care, hospitalization

18 and after care, and coopera~tion with medical, health, and

19 welfare groups and organizations.. When the Chief of the

20 Children's Bureau deems a State plan and the administra­

21 tion thereof to be in reasonable conformity with the provi­
22 sions of this section, he shall approve the same and send

23 due notice of such approval to the Secretary of Labor and

24 the, State agency concerned.
 56
1 AID TO CRULD-WELFARE, SERVICES

2 SEC. 703. (a) In order to enable the -Federal Gov­

3 ermient to cooperate with the State agencies of public
4 welfare in extending and strengthening, especially in rural

5 areas and areas suffering from severe economic distress,

6 welfare services for the protection and care of homeless,
7 dependent, and neglected children, and children in danger of
8 becoming delinquent, there is hereby appropriated for the
9 fiscal year ending June 30, 1936, from funds in the Treasury
10 not otherwise appropriated, the sum of $1,500,000, and
11 there is hereby authorized to be appropriated $1,500,000
12 for each fiscal year thereafter. From these amounts so
13 much, not to exceed 5 per centumn, as the Children's Bureau

14 shall find to be necessary for administering the provisions

15 of this section and for investigations and reports related
16 thereto, shall be deducted annually for this purpose, to
17 be available until expended. The remainder shall be allotted
18 to States for the purposes of assistance to local units,
19 especially in rural areas, in the development of public cbhid­
20 welfare services and for improvement of standards and
21 methods of child-caring service throughout the State. For
22 each fiscal year, from the appropriations herein authorized,
23 (1) The Secretary of Labor shall apportion
24 $1,000,000 among the States, allotting $10,000 to
 57
1 each State and the balance to States in the proportion
2 which their population bears to the total population of
3 the United States: Provided, That no allotment made
4 to a State under this paragraph shall exceed the sum of
5 the amount made available by the State for the purposes

6 of this section and the amount apportioned to it under

7 paragraph (2) of this subsection.
8 (2) The Secretary of Labor shall apportion the
9 remainder among States unable, because of severe
10 economic distress, to match in full the amounts allotted
11 under paragraph (1), for their use in matching such
12 sums, or for special demonstrations of methods of com­
13 munity child-welfare service.

14 (b) The sums provided under paragraph (2) of

15 subsection (a) shall be available for expenditure until the
16 close of the succeeding fiscal year. So much of the amount

17 apportioned under paragraph (1) of subsection (a) to any

18 State for any fiscal year as remains unpaid to such State -at
19 the close thereof, shall be available until the close of the suc­
2',0ceeding fiscal year for expenditures in that State under the
21 conditions prescribed in such paragraph (1), or, if not re­
22 quested by the State agency of welfare, for allocation to
23 States as provided in such paragraph (2).
24 (c) In order to receive the benefits of this section a
25 State must, through its State department of public welfare,
 58

1 or, if there be none or more than one such agency, through

2 a State agency designated by the legislature or provisionally
3 designated by the Governor if the legislature be not in ses­
4 sion, to cooperate with the Children's Bureau under the pro­
5 visions of this section, submit to the Children's Bureau a de­
6 tailed plan for effectuating the purposes of this section
7 within such State, and information concerning the amounts
8 made available by the State for such purposes, which should

9 at least equal the amounts made available for similar pur­

10 poses during the fiscal year next preceding the passage of

11 this Act, unless exceptional circumstances can be shown;
12 and, if an allocation under paragraph (2) of subsection (a)
13 of this section is requested, the conditions leading to such a

14 request. A plan must include reasonable provision for State

15 administration, State financial participation, furthering local

16 public child-welfare services, and cooperation with health

17 and welfare groups and organizations, and give due con­

18 sideration to demonstration services or services of a more

19 permanent character in rural or other needy areas or among
20 groups of the population in special need. When the Chief
21 of the Children's Bureau deems a State plan and the admin­
22 istration thereof to be in reasonable conformity with the pro­
23 visions of this section he shall approve the same and send
24 due notice of such approval to the State agency concerned.
 59
1PARTICIPATION BY CHILDREN'S BUREAU

2 SEC. 704 (a) Out of the amounts authorized in this

3 title the Children's Bureau is authorized to employ such

4 experts, assistants, clerks, and other persons in the District

5 of Columbia and elsewhere, to be taken from the eligible
6 lists of the Civil Service Commission, and to purchase such
7 supplies, material, equipment, office fixtures, and apparatus,
8 and to incur such travel and other expenses as it may
9 deem necessary for carrying out the purposes of this title.
10 It shall be the duty of the Children's Bureau to make or
11 cause to be made such studies, investigations, and reports
12 as will promote the efficient administration of this title.
13 (b) Within thirty days after an appropriation has been
14 made under the authority of this title, the Secretary of Labor
15 shall make the apportionments on the basis of live births and
16 of population as provided herein, shall certify to the Secre­
17 tary of the Treasury and to the treasurers of the several
18 States the amounts apportioned for the purposes specified.
19 and shall certify to the Secretary of the Treasury the amounts
20 estimated by the Children's Bureau to be necessary for
21 administering the provisions of this title.
22 (c) Within sixty days after any appropriation author­
23 ized by this title has been made, and as often thereafter
24 while such appropriation remains unexpended as changed
 60
1conditions may warrant, the Secretary of Labor shall ascer­
2 tain and certify to the Secretary of the Treasury and the
3 Treasurer of the U~nited States the amounts to which each
4 State is entitled under the provisions of this title, in accord­
5 ance with plans submitted by the States and approved by
6 the Children's Bureau. Such certificate shall show that
7 the State has complied with all requirements of the pertinent
8 sections of the title. When in conformity with the provisions
9 of the title such certificate, until revoked as provided in sub­
10 section (d) hereof, shall be sufficient authority to the
11 Treasurer to make payment to the State in accordance
12 therewith.
13 (d) Each State agency cooperating with the Chil­
14 dren's Bureau under the provisions of this title shall make
15 such reports concerning its operations and expenditures as
16 shall be prescribed or requested by the Bureau. The Bureau,
17 after due notice in writing, setting forth the reasons therefor,
18 may revoke any existing certificate provided for in sub­
19 section (c) whenever it shall determine that any State
20 agency has not properly expended or supervised the ex­
21 penditure of moneys paid to it for the purposes and in
22 accordance with the provisions of this title. When so
23 withheld the State agency may appeal to the Secretary of
24 Labor who may either affirm or reverse the action of the
25 Bureau with such directions as he shall consider proper.
 61
1 (e) The Children's Bureau shall perform the duties

2 assigned to it by this title under the supervision of the Secre­

3 tary of Labor, and he shall include in his annual report to
4 Congress a full account of the administration of this title

5 and expenditures of the moneys herein authorized.

6 (f) As used in this title, the term " State " shall iin­

7 elude Alaska, Hawaii, Puerto Rico, and the District of

8 Columbia.
9 TITLE VIII
10 APPROPRIATIONS FiOR PUBLIC HEALTH

11 SECTION 801. There is hereby appropriated, from funds

12 in the Treasury not otherwise appropriated, the sum of

13 $10,000,000 for the fiscal year ending June 30, 1936, and
14 there is hereby authorized to be appropriated for each fiscal

15 year thereafter the sum of $10,000,000, to be allocated to

16 the Bureau of the Public Health Service to be expended
17 as hereinafter provided.
18 LOCAL PUBLIC HEALTH SERVICES

19IC SEC. 802. From the amounts appropriated under this

20 title, the Bureau of the Public Health Service shall annually

21 allot $8,000,000 to the several States, in amounts determined

22 on the basis of the need of each State for such assistance, for
23 the purpose of developing State health services including
24 the training of personnel for State and local health work
295 and for the purpose of assisting counties and/or other po­
 62
1 litical subdivisions of the States in maintaining adequate
2 public-health programs. Payment of any allotment, or
3 installment thereof, shall be made only after the Secretary
4 of the Treasury has made a finding of fact that there is need
5 to make such money available in such State, and has noti­
6 fled the Treasurer of the United States to pay such allot-.
7 ment or installment, and the amount thereof. Any money
8 appropriated for the purposes of this section but not ex­
9 pended during the fiscal year shall be available for payment
10 of allotments to the States in the next fiscal year.
11 BUREAU OF THE PUBLIC HEALTH SERVICE

12 SEC. 803 (a) From the amounts appropriated under

13 this title, $2,000,000 shall annually be available to the
14 Bureau of the Public Health Service, for the further investi­
15 gation of disease and problems of sanitation, and related
16 matters. Out of the amounts made available in this section
17 the Bureau of the Public Health Service is authorized to
18 employ such experts, assistants, clerks, and other persons ini
19 the District of Columbia and elsewhere, to be taken from
20 the eligible lists of the Civil Service Commission, and to
al purchase such supplies, material, equipment, office fixtures,
22 and apparatus, and to incur such travel and other expenses
23 as it may deem necessary for carrying out the purposes of
24. this title.
 63
1 (b) The Secretary of the Treasury shall make all
2 rules and regulations necessary to carry out the purposes

3 of this title.
4 ACTION OF THlE COMPTROLLER GENERAL

5 SEC. 804. The Comptroller General is authorized and

6 directed to allow credit in the accounts of the Treasurer of

7 the United States for payment of allotments in the amounts

8 notified him by the Secretary of the Treasury.

9 TITLE IX
10 SEPARABILITY

11 SECTION 901. If any provision of this Act, or the

12 application t~hereof to any person or circumstance, is held

13 invalid, the remainder of the Act, and the application of

14 such provisions to other persons or circunistances shall not

15 be affected thereby.
16 RESERVATION OF POWER

17 SEC. 902. The right to alter, amend, or repeal any or

18 all provisions of this Act is hereby reserved to the Congress.

19 SHORT TITLE

20 SEC. 903. This Act may be known as " The Economic

2)1 Security Act."

74TimCONGRESS}I. 4 2
A BILL
To alleviate the hazards of old age, unemploy­
ment, illness, and dependency, to establish
a Social Insurance Board in the Depart­
ment of Labor, to raise revenue, and for
other purposes.

By Mr. DouwaTwN

JANUARY 17. 1935

Referred to the Committee on Ways and Means and
ordered to be printed
74TH CONGRESS­
1ST SESSION So 1 1 30

IN THE SENATE OF THE UNITED STATES

JANUARY 17, 1935

Mr. WAGNER introduced the following bill; which was read twice and referred
to the Committee on Finance

A BILL
To alleviate the hazards of old age, unemployment, illness, and
dependency, to establish a Social Insurance Board in the
Department of Labor, to raise revenue, and for other
purposes.

1 Be it enacted by the Senate and House of Represe'nta­

2 tives of the United States of America in Congress assembled,
3 TITLE I
4 APPROPRIATION FOR OLD-AGE ASSISTANCE

5 SECTION 1. For the purposes of this title, there is

6 hereby appropriated, from funds in the Treasury not other­

7 wise appropriated, the sum of $50,000,000 for the fiscal

8 year ending June 30, 1936, and there is hereby authorized

9 to be appropriated for each fiscal year thereafter the sum of
Note: Companion bill to H.R. 4120

Hearings were held by the Senate

Finance Committee on S. 1130 during
February 1935.
74THaCONGRESS} . 1 3

A BILL
To alleviate the hazards of old age, unemploy­
ment, illness, and dependency, to establish
a Social Insurance Board in the Depart­
ment of Labor, to raise revenue, and for
other purposes.

By Mr. WAGNER

JANUARY 1T, 1935

Read twice and referred to tbe Comimittee on Finance
 REPORT
TO THE PRESIDENT
OF THE

* COMMITTEE ON ECONOMIC
SECURITY

UNITED STATES
GOVERNMENT PRINJTING OFFICE
WASHINGTON: 1935
 TABLE OF CONTENTS

page

Letter of transmittal ---------------------------------------------­

Need for security -----------------------------------------------------
Summarry of major recommendations ----------------------------------- 3
Employment assurance ------------------------------------------- 3
Unemployment compensation -------------------------------------- 4
Old-age security ------------------------------------------------- 4
Security for children --------------------------------------------- 5
Risks arising out of ill health--------------------------------------­
Residual relief --------------------------------------------------- 7
Administration -------------------------------------------------- 7
Employment assurance ----------------------------------------------- 7
Private employment --------------------------------------------- 8
Public employment ---------------------------------------------- 8
Coordination with unemployment compensation --------------------- 9
Unemployment compensation ----------------------------------------- 10
Place in security program..------------------------------------------ 11
General sketch of legislation -------------------------------------- 15
Outline of Federal act ------------------------------------------- 17
Suggestions for State legislation ----------------------------------- 20
General comments ---------------------------------------------- 23
Old-age security ---------------------------------------------------- 23
General outline of recommendations ------------------------------- 25
Noncontributory old-age pensions --------------------------------- 26
Contributory annuities (compulsory system) ------------------------ 29
Voluntary old-age annuities -------------------------------------- 34
Security for children ------------------------------------------------ 35
Aid to fatherless children ---------------------------------------- 36
Child-care services ---------------------------------------------- 37
Child and maternal. health services -------------------------------- 37
Risks arising out of ill health ----------------------------------------- 38
Public-health services ------------------------------------------- 39
Health insurance ------------------------------------------------ 41
Residual relief ------------------------------------------------------ 43
Administration ----------------------------------------------------- 45
Accident compensation ---------------------------------------------- 45
Employment service ------------------------------------------------- 46
Educational and rehabilitation services -------------------------------- 47
Other measures for economic security ---------------------------------- 49
Conclusion --------------------------------------------------------- 50
Appendix ------------------------------------------------------ 51
List of committees advisory to the committee on economic security-. 51
 LETT~ER OF TRANSMIrTTAL

WASHINGTON, D. C., January 15, 1935.

Ihe PRESIDENT,
The 'White House.
DFAR M.R. PRESENT: In your message of June 8, 1934, to the
Congress you directed attention to certain fundamental objectives in
the great task of reconstruction; an indistinguishable and essential
aspect of the immediate task of recovery. You stated, in language
that we cannot improve upon:
Our task of reconstruction does not require the creation of new and strange
values. It is rather the finding of tbe way once more to known, but to some
degree forgotten, ideals and values. If the means and detaiis are in some
instances new, the objectives are as permanent as human nature.
Among our objectives I place the security of the men, women, and children
of the Nation first.
This security for the individual and for the family concerns itself primarily
with three factors. People want decent homes to live in; they want to locate
them where they can engage in productive work; and they want some safe­
guard against misfortunes which cannot be wholly eliminated in this man-made
world of ours.
Subsequent to this message you created, by Executive order, this
Committee, on Economic Security to make recommendations to you
on the third of the aspects of security which you outlined-that of
safeguards " against misfortunes which cannot be wholly eliminated
in this man-made world of ours."
In the brief time that has intervened, we have sought to analyze
the hazards against which specia-l measures of security are necessary,
and have tried to bring to bear upon them the world experience
with measures designed as safeguards against these hazards. We
have analyzed all proposed safeguards of this kind which have re­
ceived serious consideration in this country. On the basis of all these
considerations, we have tried to formulate a program which will
represent at least a substantial beginning toward the realization of
the objective you presented.
We have had in our employ a small staff, which included some of
the outstanding experts in this field. This staff has prepared many
valuable studies giving the factual background, summarizing Amer­
ican and foreign experience, prsnting actuarial calculations, and
making detailed suggestions for legislation and administration.
VI LETTE3 OF TRANSMrTTAL

We have also had the assistance of the Technical Board on Eco­

nomic Security, provided for in your Executive order, and composed
of 20 people in the Government service, who have special interest
and knowledge in some or all aspects of the:problem you directed us
to study. The Technical Board, functioning as a. group, through
subcommittees, and as individuals, has aided the staff and the com­
mittee during the entire investigation. Many of the members have
devoted much time to this work and have made very important
contributions, indeed. Plus these, many other people in the Govern­
ment service have unstintingly aided the committee with special prob­
lems on which their advice and assistance has been sought.
The Advisory Council on Economic Security, appointed by you
and constituted of citizens outside of the Government service, repre­
senting employers, employees, and the general public, has assisted
the committee in weighing the proposals developed by the staff and
the Technical Board, and in arriving at a judgment as to their prac­
ticability. All members of the Council were people who have impor­
tant private responsibilities, and many of them also other public
duties, but they took time to come to Washington on four separate
occasions for meetings extending over several days.
In addition to the Council, this committee found it advisable to
create seven other advisory groups: A committee of actuarial consult­
ants, a medical advisory board, a dental advisory committee, a hos­
pital advisory committee, a public-health advisory committee, a child
welf are committee, and an advisory committee on employment and
relief. All of these committees have contributed suggestions which
lhave been incorporated in this report. The medical advisory board,
the dental advisory committee, and the hospital advisory committee
are still continuing their consideration of health insurance, but joined
with the public health advisory committee in endorsement of the
program for extended public-health services which we recommend.
Finally, many hundreds of citizens and organizations in all parts
of the country have contributed ideas and suggestions. Three hun­
dred interested citizens, representing practically every State, at their
own expense, attended the National Conference on Economic Secur­
ity, held in Washington on November 14, which was productive of
many very good suggestions.
The responsibility for the recommendations we offer is our own.
As was inevitable in view of the wide differences of opinion which
prevail regarding the best methods of providing protection against
the hazards leading to destitution and dependency, we could not accept
all of the advice and suggestions offered, but it was distinctly helpful
to have all points of view presented and considered.
To all who assisted us or offered suggestions, we are deeply gratefuiL
 LETT'ER OF TRANSMITTAL VII

In this report; we briefly sketch the need for additional safeguards

against " the major hazards and vicissitudes of life." We also pre­
sent recommendations for making a beginning in the development of
safeguards against these hazards, and with this report submit drafts
of bills to give effect to these recommendations. We realize that
some of the measures we recommend are experimental and, like nearly
all pioneering legislation, will, in course of time, have to be extended
and modified. They represent, however, our best judgment as to the
steps which ought to be taken immediately toward the realization of
what you termed in your recent message to the Congress " the ambi­
tion of the individual to obtain for him and his a proper security, a
reasonable leisure, and a decent living throughout life."
R~espectfulfly submitted.
FRANCES PERKINS,
Secretary of Labor (Chairman).
HENRY MORGENTHAU, Jr.,
Secretary of the Treasto-y.
HOMER CUMMInNGS,
Attorney General,
HENRY A. WALLACE,
Secretary of Agricultwr&
HARRY L. HOPKINS,
FederalEmergevzwy Reijef Admninistrator.
 REPORT OF TILE COMMITTEE ON ECONOMIC
SECURITY

NEED FOR SECURITY

The need of the people of this country for " some safeguard against
misfortunes which cannot be wholly eliminated in this man-made
world of ours " is tragically apparent at this time, when 18,000,000
people, including children and aged, are dependent upon emergency
relief for their subsistence and approximately 10,000,000 workers
have no employment other than relief work. Many millions more
have lost their entire savings, and there has occurred a very great
decrease in earnings. The ravages of probably the worst depression
of all time have been accentuated by greater urbanization, with the
consequent total dependence of a majority of our people on their
earnings in industry.
As progress is made toward recovery, this insecurity will be les­
sened, but it is not apparent that even in the "normal ties1 of
the prosperous twenties, a large part of our population had little
security. From the best estimates which are obtainable, it appears
that in the years 1922 to 1929 there was an average unemployment of
8 percent among our industrial workers. In the best year of this
period, the number of the unemployed averaged somewhat less than
1,500,000.
Unemployment is but one of many misfortunes which often result
in destitution. In the slack year of 1933, 14,500 persons were fatally
injured in American industry and 55,000 sustained some permanent
injury. Nonindustrial accidents exacted a much greater toll. On
the average, 2.25 percent of all industrial workers are. at all times
incapacitated from work by reason of illness. Each year above one-
eighth of all workers suffer one or more illnesses which disable them
for a week, and the percentage of the families in which some mem­
ber is seriously ill is much greater. In urban families of low incomes,
above one-fifth each year have expenditures for medical and related
care of above $100 and many have sickness bills of above one-fourth
and even one-half of their entire family income. A relatively small
but not insignificant number of workers are each year prematurely
invalided, and 8 percent of all workers are physically handicapped.
 2 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY

At least one-third of all our people, upon reaching old age, are
dependent upon others for support. Less than 10 percent leave an
estate upon death of sufficient size to be probated.
There is insecurity in every stage of life.
For the largest group, the people in middle years, who carry the
burden of current production from which all must live, the hazards
with which they are confronted threaten not only their own economic
independence but the welfare of their dependents.
For those now old, insecurity is doubly tragic, because they are
beyond the productive period. Old age comes to everyone who does
not die prematurely and is a misfortune only if there is insufficient
income to provide for the remaining years of life. With a rapidly
increasing number and percentage of the aged, and the impairment
and loss of savings, this country faces, in the next decades, an even
greater old-age security problem than that with which it is already
confronted.
For those at the other end of the life cycle--the children-depend­
ence is normal, and security is best provided through their families.
That security is often lacking. Not only do the children under 16
constitute above 40 percent of all people now on relief, as com­
pared to 28 percent in the entire population, but at all times there
are several millions in need of special measures of protection. Some
of these need individual attention to restore, as fully as may be, lives
already impaired. More of them-those who have been deprived
of a father's support-need only financial aid which will make it
possible for their mothers to continue to give them normal family
care.
Most of the hazards against which safeguards must be provided are
similar in that they involve loss of earnings. When earnings cease,
dependency is not far off for a large percentage of our people. In
1929, at the peak of the stock-market boom, the average per capita
income of all salaried employees at work was only $1,475. Eighteen
million gainfully employed persons, constituting 44 percent of all
those gainfully occupied, exclusive of farmers, had annual earnings
of less than $1,000; 28,000,000, or nearly 70 percent, earnings of less
than $1,500. Many people lived in straitened circumstances at the
height of prosperity; a considerable number live in chronic want.
Throughout the twenties, the number of people dependent upon
private and public charity steadily increased.
With the depression, the scant margin of safety of many others
has disappeared. The average earnings of all wage earners at work
dropped from $1,475 in 1929 to $1,199 in 1932. Since then, there has
been considerable recovery, but even for many who are fully
employed there is no margin for contingencies.
 REPORT OF THE COMMITTEE ON ECONOMIC SEcUmrr 3
The one almost all-embracing measure of security is an assured
income. A program of economic security, as we vision it, must have
as its primary aim the assurance of an adequate income to each human
being in childhood, youth, middle age, or old age-in sickness or in
health. It must provide safeguards against all of the hazaxds
leading to destitution and dependency.
A piecemeal approach is dictated by practical considerations, but
the broad objectives should never be forgotten. W~hatvver measuires
are deemed immediately expedient should be so desiganed that they
can be embodied in the complete program which we must have erp.
long.
To delay until it is opportune to set up a complete program will
probably mean holding up action until it is too late to act. A sub­
stantial beginning should be made now in the development of the
safeguards which are so manifestly needed for individual security.
As stated in the message of June 8, these represent niot " a change in
values " but " rather a return to values lost in the course of our eco­
nomic development and expansion." " The road to these values, is
the way to progress." We will not " rest content until we have done
our utmost to move forward on that road."

SUMMARY OF MAJOR RECOMMENDATIONS

In this report we discuss briefly all aspects of the problem of eco­

nomic security for the individual. On many phases our studies en­
able us only to call attention'to the importance of not neglecting
these aspects of economic security and to give endorsement to meas­
ures and policies which have been or should be worked out in detail
by other agencies of the Government.
Apart from these phases of a complete programn for economic se­
curity with which we deal only sketchily, we present the following
major recommendations:
EMPLOYMENT ASSURANCE

Since most people must live by work, the first objective in a pro­
gram of economic security must be maximum employment. As the
major contribution of the Federal Government in providing a safe­
guard against unemployment we suggest employment assurance-
the stimulation of private employment and the provision of public
employment for those anle-bodied -workers whom industry cannot
employ at a given time. Public-work programs are most necessary
in periods of severe depression, but may be needed in normal times,
as well, to help meet the problems of stranded communities and over­
manned or declining industries. To avoid the evils of hastily
4 REPORT OF THE COM~MITTEE ON ECONOMIC SECURIT

planned emergency work, public employment should be planned in

advance and coordinated with the construction and developmental
policies of the Government and with the State and local public-works
projects.
We regard work as preferable te other forms of relief where possi­
ble. While we favor unemployment compensation in cash, we believe
that it should be provided for limited periods on a contractual basis
and without governmental subsidies. Public funds should be devoted
to providing work rather than to introduce a relief element into what
should be strictly an insurance system.
'UNEMPLOYMENT COMPENSATION

Unemployment compensation, as we conceive it, is a front line of

defense, especially valuable for those who are ordinarily steadily
employed, but very beneficial also in maintaining purchasing power.
While it will not directly benefit those now unemployed until they
are reabsorbed in industry, it should be instituted at the earliest
possible date to increase the security of all who are employed.
We believe that the States should administer unemployment com­
pensation, assisted and guided by the Federal Government. We
recommend as essential the imposition of a uniform pay-roll tax
agrainist which credits shall be allowed to industries in States that
shall have passed unemployment compensation laws. Through
such a uniform pay-roll tax it will be possible to remove the unfair
competitive advantage that employers operating in States which have
failed to adopt a compensation system enjoy over employers operat­
ing in States which give such protection to their wage earners.
We believe also that it is essential that the Federal Government
assume responsibility for safeguarding, investing, and liquidating
all reserve funds, in order that these reserves may be utilized to pro­
mote economic stability and to avoid dangers inherent in their un­
controlled investment and liquidation. We believe, further, that the
Federal act should require high administrative standards, but should
leave wide latitude to the States in other respects, as we deem experi­
ence very necessary with particular provisions of unemployment com­
pensation laws in order to conclude what types are most practicable
in this country.
OLD-AGE SECURITY

To meet the problem of security for the aged we suggest as com­

plementary measures noncontributory old-age pensions, compulsory
contributory annuities, and voluntary contributory annuities, al to
be applicable on retirement at age 65 or over.
Only noncontributory old-age pensions will meet the situation of
those who are now old and have no means of support. Laws for
 REPORT 0F THE COMMITTEE ON ECONOMIC SECURITY 5
the payment of old-age pensions on a needs basis are in force in more
than half of all States and should be enacted everywhere. Because
most of the iependent aged are now on relief lists and derive their
,support principally from the Federal Government and many of the
States cannot assume the financial burden of pensions unaided, we
recommend that the Federal Government pay one-half the cost of
old-age pensions but not more than $15 per month for any individual.
The satisfactory way of providing for the old age of those now
young is a contributory system of old-age annuities. This will enable
younger workers, with matching contributions from their employers,
to build up a more adequate old-age protection than it is possible to
achieve with noncontributory pensions based upon a means test. To
launch such a system we deem it necessary that workers who are now
middle-aged or older and who, therefore, cannot in the few remain­
ing years of their industrial life accumulate a substantial reserve be,
nevertheless, paid reasonably adequate annuities upon retirement.
These Government contributions to augment earned annuities may
either take the form of assistance under old age pension laws on a
more liberal basis than in the case of persons who have made no
contributions or by a Government subsidy to the contributory an­
nuity system itself. A portion of these particular annuities will
come out of Government funds, but because receipts from contribu­
tions will in the early years greatly exceed annuity payments, it will
not be necessary as a financial problem to have Government contribu­
tions until after the system has been in operation for 30 years. The
combined contributory rate we recommend is 1 percent of pay roll
to be divided equally between employers and employees, which is to
be increased by 1 percent each 5 years, until the maximum of 5
percent is reached in 20 years.
There still remains, unprotected by either of the two above plans,
professional and self-employed groups, many of whom face de­
pendency in old age. Partially to meet their problem, we suggest
the establishment of a voluntary Government annuity system, de­
signed particularly for people of small incomes.
SECURITY F~OR CHILDREN

A large group of the children at present maintained by relief

will not be aided by employment or unemployment compensation.
There are the fatherless and other "young"~families ~without a
breadwinner. To meet the problems of the children in these families,
no less than 45 States have enacted children's aid laws, generally
called " mothers' pension laws." However, due to the present finan­
cial difficulty in which many States find themselves, far more of
such children are on the relief lists than are in receipt of children's
 6 REPORT OF THE COMMITEE ON ECONOMIC SECURrTY

aid benefits. We are strongly of the opinion that these families

should be differentiated from the permanent dependents and unem­
ployables, and we believe that the children's aid plan is the method
which will best care for their needs. We recommend Federal grants-
in-aid on the basis of one-half the State and local expenditures for
this purpose (one-third the entire cost).
We recommend also that the Federal Government give assistance
to States in providing local services for the protection and care of
homeless, neglected, and delinquent children and for child and ma­
ternal health services especially in rural areas. Special aid should
be given toward meeting a part of the expenditures for transpor­
tation, hospitalization, and convalescent care of crippled and handi­
capped children, in order that those very necessary services may be
extended for a large group of children whose only handicaps are
physical.
RISKS ARISING OUT OF ELL HEALTH

.As a first measure for meeting the very serious problem of sick­
ness in families with low income we recommend a Nation-wide pre­
ventive public-health program. It should be largely financed by
State and local governments and administered by State and local
health departments, the Federal Government to contribute financial
and technical aid. The program contemplates (1) grants in aid
to be allocated through- State departments of health to local areas
unable to finance public-health programs from State and local re­
sources, (2) direct aid to States in the development of State health
services and the training of personnel for State and local health
work, and (3) additional personnel in the United States Public
Health Service to investigate health problems of interstate or
national concern.
The second major step we believe to be the application of the
principles of insurance to this problem. We are not prepared at
this time to make recommendations for a system of health insur­
ance. We have enlisted the cooperation of advisory groups repre­
senting the medical and dental professions and hospital manage­
ment in the development of a plan for health insurance which will
be beneficial a-like to the public and the professions concerned. We
have asked these groups to complete their work by March 1, 1935,
and expect to make a further report on this subject at that time
or shortly thereafter. Elsewhere in our report we state principles
on which our study of health insurance is proceeding, which indi­
cate clearly that we contemplate no action that will not be quite as
much in the interests of the members of the professions concerned
as of the families with low incomes.
 REPORT OF THE COMMITTEE ON ECONOMIC SECU'RITY 7
RESIDUAL RELIEF

The measures we suggest all seek to segregate clearly distinguish­

able large groups among those now on relief or on the verge of
relief and to apply such differentiated treatment to each group as
will give it the greatest practical degree of economic security. We
believe that if these measures are adopted, the residual relief prob­
lem will have diminished to a point where it will be possible to
return primary responsibility for the care of people who cannot
work to the State and local governments.
To prevent such a step from resulting in less humane and less
intelligent treatment of unfortunate fellow citizens, we strongly
recommend that the States substitute for their ancient, out-moded
poor laws modernized public-assistance laws, and replace their tra­
ditional poor-law administrations by unified and efficient State and
local public welfare departments, such as exist in some States and
for which there is a nucleus in all States in the Federal emergency
relief organizations.
ADMINISTRATION

The creation of a social insurance board within the Department of

Labor, to be appointed by the President and with terms to insure
continuity of administration, is recommended to administer the Fed­
eral unemployment compensation act and the system of Federal con­
tributory old-age annuities.
Full responsibility for the safeguarding and investment of all
social insurance funds, we recommend, should be vested in the Secre­
tary of the Treasury.
The Federal Emergency Relief Administration is recommended as
the most appropriate existing agency for the administration of non­
contributory old-age pensions and grants in aid to dependent chil­
dren. If this agency should be abolished, the President should desig­
nate the distribution of its work. It is recommended that all social
welfare activities of the Federal Government be coordinated and
systematized.
EMPLOYMENT ASSURANCE

A program of economic security for the Nation that does not

include those now unemployed cannot possibly be complete. They,
above all, are in need of security. Their tragic situation calls atten­
tion not only to their own desperate insecurity but to the lack of
security of all those who are dependent upon their own earnings for
a livelihood. Therefore, any program for economic security that is
devised must be more comprehensive than unemployment compen­
sation, which of necessity can be given only for a limited period. In
proposing unemployment compensation we recognize that it is but
a complementary part of an adequate program for protection against
5 REPORT OF1 THE COMMITTEE ON ECONOMIC SECURITY

the hazards of unemployment, in which stimulation of private em.

ployment and provision of public employment on a security-payment
basis are other major elements.
PRIVATE EMPLOYMENT

In our economic system the great majority of the workers must

find work in private industry if they are to have permanent work.
The stimulation and maintenance of a high level of private employ­
ment should be a major objective of the Government. All measures
designed to relieve unemployment should be calculated to promote
private employment and also to get the unemployed back into the
main channel of production. We believe that provision of public
employment in combination with unemployment compensation will
most effectively serve these purposes. Both will operate to maintain
purchasing power, and public employment will indirectly give work
to many more persons in private industry who otherwise would have
none. At the same time it will stimulate workers to accept and seek
private employment when it becomes available.
PUB3LIC EMPLOYMENT

What the Federal, local, and State governments would be called

upon to do in providing work depends upon many complicated
factors: financial resources, advance planning, the general industrial
trend and methods; but it is a sound principle that public employ­
ment should be expended when private employment slackens, and it
is likewise sound that work in preference to relief in cash or in kind
should be provided for those of the unemployed who are willing and
able to work.
The experience of the past year has demonstrated that making
useful work available is a most effective means of meeting the needs
of the unemployed. Further, it has been demonstrated that it is
possible to put large numbers of persons to work quickly at useful
tasks under conditions acceptable to them. The social and economic
values of completed projects represent a considerable offset to the
economic losses occasioned by millions of unemployed workers.
Work maintains occupational skill. The required expenditures have
an important stabilizing effect on private industry by increasing
purchasing power and employment, and the completed works fre­
quently produce self-liquidating income.
In periods of depression public employment should be regarded
as a principal line of defense. Even in prosperous times it may be
necessary, on a smaller scale, when " Pockets " develop in which there
is much unemployment, Public employment is not the final answer
to the problem of stranded communities, declining industries, and
impoverished farm families, but is necessary supplement to more
 ENPORT OF THE COMMITTEE ON ECONOMIC SrECURM~ 9
fundamental measures for the solution of such problems. And it
must be remembered that a large part of the population will not
be covered by unemployment compensation. While it will not always
be necessary to have public employment projects to give employment
assurance, it should be recognized as a permanent policy of the
Goverrmnent and not merely as an ernergencT measure.
Such an employment program must be related to unemployment
compensation; and the resources of all public bodies-Federal, State,
and local-must be coordinated if the policy of employment assur­
ance is to be effectively realized. It would be advantageous to include
in the program many types of public employment other than those
which are considered necessary for the reg-ular operations of gov­
ernmnent. This would include not only public construction of all
kinds, but also appropriate work to employ usefully the professional
and self -employed groups in our population. Because of the pre­
dominant importance of State and local construction in total public
construction -it is also essential that such Federal agencies as are
established be empowered to incorporate State and local construction
into the work program. It would also be desirable to extend Fed­
eral loans at low rates of interest to States and local governments
for employment purposes. Such loans, once established, should be
on a self -liquidating basis, and should become a. revolving fund to
be used over and over again as loans are repaid.
This entire program points immediately and inevitably toward
practical advance planning--on a broad scale to make the potential
resources of a region available for the general welfare of the people
involved and toward detailed development of individual projects.
To this end we endorse the recommendations of the National Re­
sources Board for the establishment of a permanent national plan­
ning board.
We propose that public employment be made as nearly like private
employment as possible. Applicants should be selected for their
apparent ability to do the work offered as well as on the basis of
their need; and we believe the public employment officers should be
extensively utilized for this purpose. Only those who really work
should be kept at work; the others should be discharged as in private
employment.
COORDINATION WITZI UNEMPLOYMENT COMPENSATION

We believe it is desirable that workers ordinarily steadily employed

be entitled to unemployment compensation in cash for limited periods
when they lose their jobs. It is against their best interests and those
of society that they should be offered public employment at this stage,
thus removing them from immediate consideration for reemploy-
UZs -5-­
10 REPORT 0OP THE COMMMTEE ON ECONOMIC SECURITY

ment at their former work. Very often they will need nothing
further than unemployment compensation benefits, for they will be
able to reenter private employment after a brief period, but if they
are unable to do so and remain unemployed after benefit rights are
exhausted, we recommend they should be given, instead of an ex­
tended benefit in cash, a work benefit-an opportunity to support
themselves and their families at work provided by the Government.
Similarly we deem provision of work the best measure of security
for able-bodied workers who cannot be brought under unemployment
compensation. Such workers will become eligible for public employ­
ment soon after the loss of regular employment; but more care will
have to be exercised in their selection, to be certain that only workers
who are ordinarily employed are given public employment.

UNEMPLOYMENT COMPENSATION

DESCRIPTION

Unemployment compensation as we use this term includes both.

unemployment insurance and unemployment reserves. It is a device
through which reserves are accumulated during periods of employ­
ment to be paid out in periods of unemployment. In every system
of unemployment compensation set up thus far, these reserves arp,
built up through contributions paid by the employers alone, the
employers and employees, or the employers, employees, and the
Government. Except in England (where the contributions are
uniform amounts per employee), the contributions everywhere are
expressed as percentages of pay roll, and only in Belgium is a dis­
tinction made in the rate of contribution in different industries in
accordance with their risk of unemployment.
All European systems create pooled unemployment insurance
funds for the entire state, or nation, in which the contributions of
all employers are commingled. The systems voluntarily established
by a number of employers in this country and also the Wisconsin
law (which is the only unemployment compensation act in force in
this country) establish, instead, industry or company unemployment
reserves, in which each employer (or industry) is responsible for his
own employment and his employees must look exclusively to his
reserve fund for their compensation.
Some European unemployment insurance systems are voluntary,
but the experience everywhere has been that compulsory coverage is
necessary to include a majority of the industrial workers., Even with
compulsory coverage large groups of workers cannot readily be
brought under unemployment compensation; among them employees
in very small establishments, and, of course, all self-employed
peron&
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 11

Benefits from unemployment insurance funds are payable only for

involuntary unemployment which is not due to the employee's own
misconduct. An employee who is discharged or laid off is required
to register at his nearest employment office, but draws no benefits
during a specified waiting period. (In the basic calculations of our
actuaries, a waiting period of 4 weeks was assumed.) If still unem­
ployed after the waiting period, the worker becomes entitled to
unemployment compensation at a specified percentage of his average
wages prior to his discharge or lay-off, subject to an absolute maxi­
mum and, usually, also an absolute minimum. (In our calculations
a 50 percent compensation rate and a maximum of $15 per week, but
no minimum, were assumed.) Payments are usually made weekly
and, an important condition in any unemployment compensation
system, the unemployed worker must keep in touch regularly with
the employment office and cannot draw any further benefits if he
refuses to accept suitable employment offered him. In any event, the
maximum number of weeks of benefit that may be drawn is definitely
limited through a ratio of weeks of benefit to weeks of previous
employment (1 to 4 in our calculations) and by absolute limitations.
(We suggest to the States in framin~g their laws that on the basis of
3-percent-contribution rate, the maximum benefit period cannot
safely exceed 16 weeks and should be reduced to 15 weeks, if it is
desired to give workers who have been long employed without draw­
ing benefits an additional (maximum) week of compensation for each
6months they have been employed without drawing benefits, up to a
maximum of 10 additional weeks.)
After an unemployed worker has exhausted his rights to benefits,
European systems generally permit him to draw extended benefits, on
a means-test basis, for additional periods, the entire cost of which
is borne, by the government. 4-s we have stated, such extended cash
benefits seem to us far less desirable than work benefits, and we rec­
ommend that an employee, after he has exhausted his contractual
rights, be certified to the authorities in charge of the Federal work
program as entitled to a work benefit. Such certification shall entitle
the unemployed insured worker, who has exhausted his cash benefits,
to employment on any available public employment project, without
a means test, but with the proviso that he must be dependent upon,
his own earnings and that not more than one member of any familv
or household will be given public employment.
PLACE IN SECURITY PROGRAM

The actuaries and other technicians we have consulted estimate

that if the, plan we suggest had been in operation throughout the
country in 1933, somewhat less than an average of 16,000,000 emn­
ployed workers would have been included in the system, and thaz
12 REPORT OF THE commITTEE ON ECONOMIC SECURITY

had there been in that year 100 percent employment, slightly more
than 26,000,000 would have been included-one-half of the entire
number of those gainfully occupied. These figures give the approxi­
mate minimum and maximum number of workers who can be
brought under unemployment compensation; the total, at any given
time depending upon the state of industrial activity and the extent
to which the system is really Nation-wide in operation.
If a system of unemployment compensation had been in opera­
tion everywhere in this country during the years from 1922 to 1933,
it is estimated that a 3 percent contribution rate with this coverage
would have resulted in average total collections of approximately
$825,000,000 per year, or $10,000,000,000 in the entire period. The
estimated collections would have varied from a. high of approxi­
mately $1,040,000,000 in 1929 to a low of $560,000,000 in 1932. Dur­
ing the twenties the contributions would have considerably exceeded
the benefits paid and at the maximum point in 1929 approximately
$2,000,000,000 would have been accumulated in the unemployment
reserve funds, which would have been spent quite rapidly after the
depression set in. In comparison with the emergency relief expendi­
tures, now approximating $1,800,000,000 per year, or the $1,000,­
000,000 annually invested by the workers of the country in indus­
trial insurance even during the depression, and the more than $20,­
000,000,000 of assets of life-insurance companies, the total annual
contributions and maximum reserves in a Nation-wide unemploy­
ment compensation system are small, but they are by no means
negligible.
Unemployment compensation does not lend itself to actuarial de­
termination of benefits of the same pr..cision as is possible in other
forms of insurance. We have now in this country only very limited
statistics of unemployment. One of the values of a Naton-wide
system of unemployment compensation will be the collection of
accurate and comprehensive unemployment statistics which it will
make possible.
On the assumption, however, that the past experience during the
entire business cycle does furnish at least an approximate guide
to possible future unemployment, our actuaries and statisticians have
computed the maximum benefit periods which could have been
allowed at varying contribution rates. These computations were
made on the basis of the unemployment experience of the years
1922 to 1933 and 1922 to 1930, respectively, as shown in table IL
 REPORT OF THE COMMITTEE CMNECONOMIC SECURITY 13
Actuarial estimates of the maximnum number of weeks of benegfit that 0Ooud
have been paid at varioics contribution rates and waiting periods under
a nation-wide unemnptoipnnt compensation system on the bcasis of the
unemployment rates front 1922 to 1988, and from 1922 to 1930)

Standard maximum weeks of benefits

Waiting 1922 to 1933 experience 1922 to 1930 experience

Contribution rate period __ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _
(in weeks)- _ _ _ _ _ _ _ _ _ _ -

Unad- With actul- Unad- With actu­

jutd arial ad. lutd anal ad-
use ustments Fite Justments

3 percent ------------------------ 4 14 10 20 15
3 percent ------------------------ 3 13 9 18 14
3 percent -------------------- 2 12 8 17 12
4 percent ------------------------ 4 21 15 36 24
4 percent ------------------------ 3 20 14 32 21
4 percent ------------------------- 2 18 12 28 18
5 percent------------------------- 4 35 21 48 38
5 percent ----------------------- 3 31 19 48 35
5 percent -------------- ---------- 2 27 17 46 30

Assumptions in the unadjusted computations

(1) Nation-wide coverage, including all establishments employing six or more
employees, but applying to the first $50 pet weck as a wage or salary to any
employee; (2) 1 year of contributions before benefits became payable; (3)
deficits in reserve funds after end of period; and (4) benefits of 50 percent
of the average weekly wages.
Adjustments
On the columns giving the estimated maximum weeks of benefit " with ac­
tuarial adjustments " the above assumptions are basic but allowance is made
for all factors likely to increase or decrease costs, among them (1) the rule
that no employee muay draw benefits for whom contributions have not been paid
for at least 40 weeks in the preceding years nor for 10 weeks after he has
exhausted his benefit rights; (2) savings throughi employees voluntarily quit­
ting their work and discharges for pr-oven misconduct; (3) allowance of an
additional maximum week of benefits for each 6 months (if c-ontributions with­
out drawing benefits, up to a maximum of 10 additional weekcs; (4) limitation
of benefits in the ratio of 1 week of benelits to 4 weeks of contributions; (5)
compensation for part-time unemployment; (6) limitation of compensation in
seasonal industries to unemployment occurring within the normal season; (7)
limitation of the maximum benefit to $15 per week; (8) estimated increases
in costs resulting from the fact that benefits will be paid on a full-titne-wage
basis while the contributions are made on actual pay roll, including much part
time; (9) inadequacy of data; and (10) allowances for various contingencies,
among them the probability of increased costs in the course of time, as is the
experience in all other forms of insurance. Weighting all these and some other
factors, the actuaries arrived at a loading of 28 percent above the unadjusted
cost figures.
While the maximum benefit periods, set forth in table I, are mere
approximations, they very clearly indicate, that on a contractual
basis, benefits can be paid only for periods which, to many people,
will seem short. The benefits are small, although considerably
higher on the average than relief grants. While unemployment
compensation is far from being a complete protection, it is a valu­
able first line of defense for the largest group in our population,
14 REPORT OP THE COMMITTEE ON ECONOMIC SECURITy

the industrial workers ordinarily steadily employed. Unemploy­

ment compensation should permit such a worker, who becomes un­
employed, to draw a cash benefit for a limited period during which
there is expectation that he will soon be reemployed. This should
be a contractual right not dependent on any means test. Normally
the, insured worker will return to his old job or find other work
before his right to benefits is exhausted. If he does not find work,
we recommend that his further period of unemployment should be
met by a work benefit, as described in the section of this report deal­
ing with employment assurance. This correlation between the cash
benefit and the work benefit is recommended, and it seems to us that
th1.e combination is both fair and desirable. It will carry workers
over most, if not all, periods of unemployment in normal times, with­
out resort to any other form of assistance. While the maximum
benefit periods indicated by the actuarial calculations are short in
relation to the unemployment suffered by the people now on relief,
it must be remembered that in ordinary industrial periods the great
majority of workers who become unemployed find other work in a
much shorter time.
But unemployment compensation is also valuable in depressions.
If the benefits are kept within the limits we suggest, the funds should
prove adequate for all minor depressions. In a depression of such
depth as that which has prevailed since 1929 the funds are likely
to be exhausted but will prove very helpful in the early stages. Had
$2,000,000,000 been available. for distribution to the workers when
depression set in in 1929-as it might have been, had an unemploy­
ment-insurance system with a 3-percent contribution rate been in
operation from 1922 on-it would have had a most pronounced
stabilizing effect at a very crucial time. 'Within a year, or a little
more, these accumulated reserve funds would have been exhausted,
but considerable amounts would still have continued to be collected
in contributions and distributed to the uinemployed in benefits,
thereby reducing relief costs and lightening the financial load on tile
public and the Government.
Some economists urge that, instead of using a tax on pay rolls,
unemployment compensation should be paid through Federal Gov­
ermient borrowings to be repaid hereafter out of other types of
Federal taxes. Without expressing any judgment on that conten­
tion, we deem it desirable, at the present time, to employ a pay-roll
tax for unemployment compensation, although it may be possible
that experimentation under the proposed statute will show that
at some time in the future a plan built upon the other alternative sug­
gestion should be substituted, in whole or in part, for that which
we are proposing.
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 15
In not recommending any contributions derived from bond issues
or income or other general tax sources we have had in mind that the
Government under the plan we suggest will incur large expenditures
in providing a work benefit, which will complement the cash bene­
fits from unemployment compensation. It is our conviction that, at
least at this time, general tax revenues should be drawn upon rather
for employment assurance than for unemployment compensation.

GENERAL SKETCH OF LEGISLATION

Unemployment insurance has been in successful operation in

England and many other European countries for some years.
While the English system suffered some discredit through the com­
bination, from 1924 to 1931, of insurance with relief and in all coun­
tries the unemployment-insurance funds have had to be govern­
mentally aided and/or the rate of contributions increased and bene­
fits decreased during the present depression, unemployment insurance
everywhere has survived the depression. (Russia, however, has paid
no benefits since 1930.) While unemployment insurance has not
proved a panacea for unemployment, it has in all countries provided
a self-respected method of support, far superior to relief, for a large
percentage of the unemployed.
In this country there has been considerable interest in unemploy­
ment insurance ever since the enactment of the pioneer British law
of 1911, especially since the depression of 1920-21. In the years
that have intervened, considerable controversy has developed over
the type of unemployment compensation legislation that should be
enacted; particularly over such questions as unemployment insurance
versus unemployment reserves, employee contributions, governmental
contributions, extended benefits, and the type of unemployment to be
benefited. It is our conviction that these controversies have devel­
oped largely because there has been no action, and, therefore, no
practical experience on this subject. Further investigations and
other devices for delay will merely enhance the negative character
of the debate. What is needed at this state is demonstration, not
further debate and research.
This background, it seems to us, is an important consideration in
determining the type of unemployment compensation legislation to
be recommended. It clearly suggests the desirability of permitting
considerable variation, so that we may learn through demonstration
what is best. This, we believe, can at this time best be secured under
a cooperative Federal-State system, which permits variations in
State laws but insures uniformity in respects in which uniformity is
abwolutely essential.
16 REPORT OF THE COMMITTEE ON ECONOMIC SECuuITYr

A federally administered system of unemployment compensation

is undoubtedly superior in some respects, particularly in relation to
employees who move from State to State. This presents a problem,
Involved in State administration, which we do not at this time know
how to solve, although we do not regard it as insoluble and recom­
mend that it should be made one of the major subjects of study
of the Federal administrative agency. We recognize also that in
other resp~ects State administration may develop marked inade­
quacies. Should these fears expressed by*the champions of a fed­
erally administered system prove true, it is always possible by sub­
sequent legislation to establish such a system. We recommend that
it be expressly provided in the Federal act that all States must
include in their statutes provisions to the effect that those acts shall
not be deemed to create any vested interests preventing modification
or repeal and that a similar reservation of power be made by the
Federal Government. Accordingly, the Congress can at any time
increase the requirements which State laws must fulfill and may,
if it sees fit, at some future time, substitute a federally administered
system for the cooperative Federal-State system we recommend.
All things considered, however, we deem it the safest and soundest
policy to confine the role of the Federal Government with respect to
this problem at this time to removing obstacles to State action, safe­
guarding and liquidating the reserve funds, and aiding the States
with their problems, leaving to them primary responsibility for
administration.
Federal cooperation is essential, because the States cannot establish
systems of unemployment compensation with reasonably favorable
conditions unless there is assistance from the Federal Government.
So long as there is danger that business in some States will gain a
competitive advantage through failure of the State to enact an un­
employment compensation law, few such laws will be enacted. This
obstacle to State action can be removed only through the imposition
by the Federal Government of a uniform tax (rate of contribution)
on all employers throughout the country, so that no State will have
an unfair advantage. We therefore recommend legislation which
will impose a uniform Federal tax on payrolls with an offset per­
mitted to any employer who contributes to an unemployment insur­
ance fund under a compulsory State law. This we believe will en­
courage the speedy enactment of State laws which meet minimu
standards of security and fairness.
The Federal Government has a further important obligation in the
safeguarding and investment of the reserve funds. Unemployment
reserve funds are peculiar in that the demands upon them will fluc­
tuate violently with industrial conditions. In good years these funds
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 17
will have receipts far in excess of disbursements; when serious de­
pression sets in, the reserves will be used up rapidly. Unemploy­
ment compensation should not operate to increase unemployment, but
there is danger that it will do so unless there is intelligent and unified
handling of the reserve funds. One of the most important elements
in attaining economic stability is the credit policy of the Government.
Unless the investment and liquidation of the unemployment reserve
funds is coordinated with this credit policy, these funds may operate
to nullify the attempts of the Government to maintain stability.
Particularly, when the Government is trying to prevent a depres­
sion the unemployment reserve funds should not be thrown on the
markets, as they are likely to be if held by the States or in private
hands. Intelligently handled, unemployment reserve funds can be
made an important factor in preventing a depression; but utilization
for this purpose is possible only if their investment and liquidation
is within control of the United States Treasury. We deem this an
absolute essential if unemployment compensation is to accomplish
the purposes for which it is designed.
Beyond this, the respective spheres of the State and local govern­
ments in unemployment compensation are not clearly defined. Some
standardization is desirable, but we believe that this should not be a
matter of Federal control, but of cooperative action. A coopera­
tive Federal-State unemployment compensation system should in­
clude the essentials we have outlined. In making definite recom­
mendations as to the technique of establishing such a system, we are
proceeding in the conviction that our purpose could be most promptly
and effectively accomplished by Federal legislation which would
(1) produce uniformity in the burden, by levying a pay-roll tax;
(2) stimulate the passage of complete and self-sustaining unemploy­
mient compensation laws in the States, by allowing a credit against
the Federal tax for contributions paid under State laws; and (3)
to allow the necessary central control of the reserve funds, in order
to prevent their operating toward instability. We prefer a tax
credit device to one in which the tax would be wholly collected and
then remitted, as grants-in-aid, to the States, because under the
latter system the States would not have self -supporting laws of
their own, and as with all compensation having its source in Federal
grants there would be great and constant pressure for larger grants
exceeding the money raised by the tax, with a consequent confusion
of compensation and relief.
OUTUNE OF' FEDERAL ACT

We earne.41ly recommend prompt enactment by the Congress of

legislation which will (1) impose a uniform pay-roll tax on the em­
18 REPORT OF THE COMMITTEE ON ECONOMIC SECURrTy

ployers to whom the act is applicable, beginning with the year 1936,
and (2) create machinery for participation in the administration of
unemployment compensation.
The tax should be imposed upon all employers who have em­
ployed four or more employees for a reasonable period of time (any
13 weeks of the taxable year for example), and should be measured
by a percentage of the employer's pay roll. By 1938 the rate of tax
should be 3 percent of the pay roll; but in the first 2 years, if
economic recovery has not progressed satisfactorily, we recommend
a lower rate, and suggest that the index of industrial production of
the Federal Reserve Board may well be used to determine whether
the rate in the first and second years shall be 1 percent, 2 percent, or
3 percent. We are opposed to exclusions of any specified industries
from the Federal act, but favor the establishment of a separate
nationally administered system of unemployment compensation for
railroad employees and maritime workers.
Against the tax imposed in the Federal law, a credit, up to 90
percent of the tax, should be allowed for the money the employer
has paid to the proper State authority as contributions for unem­
ployment compensation purposes pursuant to State law. These
credits, however, should be permitted only if the State is cooperating
with the Federal Government in the administration of unemploy­
ment compensation, expending the money raised solely for benefits,
and is depositing all contributions as collected in an unemployment
trust fund in the United States Treasury, as hereafter recommended.
If a State, to encourage stabilization of employment, permits par­
ticular industries or companies to have individual-reserve or guar­
anteed-employment accounts-accounts to be kept by the State au­
thority but deposit of the funds in the United States Treasury--or
allows lower rates of contributions to employers not having such
individual accounts on the basis of their favorable experience, an
additional credit beyond the amount contributed in a particular year
may be granted in the Federal act. We recommend, however, that
such credit be allowed in all cases only on the condition that the
employer has discharged in full his obligations under the State law
and continues to pay at least 1 percent into the pooled State fund.
Further, such an employer with an individual-reserve account, before
becoming entitled to any additional credit, must have and maintain
a reserve equal to at least 15 percent of his pay roll, and an employer
with a guaranteed-employment account, a reserve of 7('2 percent of
his pay roll; while no additional credit for any reduction in rates
payable to a pooled State fund may be allowed until after the State
law has been in operation for 5 years.
To encourage efficient administration, without which unemploy.
mnent insurance will fail to accomplish its purpose, we believe that
 DEPORT OF THE COMMITTEE ON ECONOMIC SECUR.ITY 19

the Federal Government should aid the States by gra~nting them

sufficient money for proper administration, under conditions de­
signed to insure competence and probity. Among these conditions
we deem selection of personnel on a merit basis vital to success. We
also recommend that as a condition, both of grants-in-aid for admin­
istration and of the allowance of any tax credits for payments made
under any State unemployment compensation act, the State must
have accepted the provisions of the Wagner-Peyser Act and provide
for the payment of unemployment compensation through the public
employment offices established under such act. A grant-in-aid for
administration would not create any new burden on the Federal
Government, as it would be paid for by the amount of the pay roll
tax over and above the credits allowed for contributions to State
funds.
As an essential part of the Federal law it should be made a require­
ment for any tax credits that all moneys collected for unemployment
compensation purposes under State laws-including those credited
to individual industry or company accounts-be deposited as col­
lected in the Treasury of the United States in a trust account to the
credit of the State, to be invested a~nd liquidated as the Secretary of
the Treasury may from time to time direct. Interest on the average
amount so deposited in each State fund shall be allowed at regular
intervals, at a rate equal to the average yield of all outstanding pri­
mary obligations of the Federal Government, less one-eighth of 1
percent. Withdrawals from the fund are to be made only for unem­
ployment compensation purposes, under regulations to be prescribed
by the Secretary of the Treasury.
The collection of the Federal tax and investment of the reserve
funds should be made under the control of the Secretary of the
Treasury. All other aspects of Federal participation in unemploy­
ment compensation should be a responsibility of the Department
of Labor. We recommend the creation within the Department of
Labor of a social insurance board. We recommend that the board
consist of three members appointed by the President. They should
devote full time to their duties and be appointed for terms of 6
years, which should be varied at the outset to insure continuity in
administrative policies. We recommend that this board be given
power to decide what State laws comply with the Federal require­
ments and that it be made its duty to assist States in setting up
unemployment compensation administrations and in the solution of
the problems they will encounter; also that it conduct continuous
studies to correlate and make useful the experience developed under
State laws. The social insurance board should, likewise, have
responsibility for the administration of the compulsory and volun­
20 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY

tary systems of old-age annuities, whose establishment we suggest in

another section of this report, and should study the advisability of
instituting other forms of social insurance.
The plan for unemployment compensation that we suggest con­
templates that the States shall have broad freedom to set up the type
of unemployment compensation they wish. We believe that all mat­
ters in which uniformity is not absolutely essential should be left to
the States. The Federal Government, however, should assist the
States in setting up their administrations and in the solution of the
problems they will encounter.
SUGGESTIONS FOR STATE LEGISLATION

This committee plans the preparation of a model State unemnploy­

ment-compensation bill, with alternate clauses at many points. In
this report it seems unnecessary to discuss all of the details of this
model bill, since the legislature will determine the policy in each
State. On some major points, however, comment seems appropriate.
Contributions.-The States should make all contributions compul­
sory and may require them from employers alone, or from employers
and employees, with or without contributions by the State government.
Beneflts.-The States should have freedom in determining their
own waiting periods, benefit rates, maximum benefit periods, etc. We
suggest caution lest they insert benefit provisions in excess of collec­
tions in their laws. To arouse hopes of benefits which cannot be
fulfilled is invariably bad social and governmental policy.
It is our recommendation that the benefit periods be kept within the
maximum limits of the last column of table I, which has been pre­
sented earlier in this report, and in no event should they exceed those
of the second last column. If it is considered desirable that the unemn­
ployment-compensation funds should give protection* in depression
periods as well as in normal times, the maximum periods of the first
two columns should be regarded as standard. While unemployment
varies greatly in different States, there is no certainty that States
which have had less than nolrmal unemployment heretofore will in the
future have a more favorable experience than the average for the
country. States whose industries are such that they will probably
continue to have a h~igh rate of unemployment should not pay benefits
up to the maximum amounts permitted in the actuarial calculations.
With industry or company funds, longer benefit periods can be per­
mitted if the employers guarantee payment of these benefits in full
and furnish security adequate to insure fulfillment of these guaran­
ties; but in all other cases it is preferable, at the outset, to err on the
side of safety than of too great liberality.
 RE-PORT OF THE COMMITTEE OX ECONOMIC SECURITY 21
At this point we call attention to the desirability of allowing addi­
tional weeks of benefit to employees who have been long employtd
without drawing benefits. The British experience has been that a
very large percentage of all employees draw no benefits over periods
of many years. These are the workmen longest retained, who, par­
ticularly if they are required to contribute, have a very good claim
for additional benefits when, because of a depression or change in
technique. they lose their jobs and are unable to find other work.
Our actuarial estimates indicate that if 1 week is taken off the
ordinary benefit period for all workers, a special maximum of an
additional week of benefits can be allowed to workers who have not
drawn benefits for 6 months, 2 weeks for those who have not drawn
benefits for 12 months, etc., up to a maximum of 10 weeks additional
benefits for workers wht have not drawn any benefits for 5 years.
Provisions to protect funds8 against heavy drains by particular
classes of employees .T he provision last suggested is in line witb
the world experience that unemployment compensation is best
adapted to employees who normally have- some degree of security in
their employment. Such workers, we feel, should be given some
protection against exhaustion of the funds by others who work only
intermittently.
English experience has demonstrated that seasonal industries will
cause a heavy drain on the unemployment-insurance funds unless
the benefits to seasonal workers are limited to unemployment occur­
ring within the usual season for that particular industry. Deter­
mination of what this season is for each distinct seasonal industry
must necessarily be left to the administrative authority.
Similarly the funds need to be protected against too heavy drain
by the casual workers. This can best be done (1) through a ratio
which relates the maximum 'weeks of benefit to the weeks of employ­
ment, the usual ratio suggested being 1 to 4; and (2) allowing
benefits only if the employee has worked with some degree of
regularity.
Partial unemployment creates another special problem. It is
desirable, within limits, that work shall be shared when orders fall
off, rather than that some employees shall be laid off altogether. It
is also desirable that an unemployed man take part-time or odd-job
employment when possible. Therefore, to encourage this, we advise
that State laws should provide that the combination of part-time
wages and benefits is better than benefits alone.
Willingness to work test.-To serve its purposes, unemployment
compensation must be paid only to workers involuntarily unem­
ployed. The employees compensated must be both able and willing
to work and must be denied benefits if they refuse to accept other
22 REPORT OF TRE COMMITTEE ON ECONOMIC SECURITY

suitable employment. Workers, however, should not be required to

accept positions with wage, hour, or working conditions below the
usual standard for the occupation or the particular region, or out­
side of the State, or where their rights of self-organization and
collective bargaining would be interfered with.
Individual induwtr~y and company account8.-The primary pur­
pose of unemployment compensation is to socialize the losses re­
sulting from unemployment, but it should also serve the purpose of
decreasing rather than increasing unemployment. We favor leav­
ing it optional with the States whether they will permit any " con­
tracting out" from State-pooled funds in the sense that separate
accounts may be set up for the exempted industries or companies,
but without any change in the methods of collection or deposit and
investment of funds. We strongly urge, however, that only plants
which furnish adequate security to guarantee payment in full of all
unemployment compensation which may become due to their em­
ployees shall be permitted to have separate accounts, and only upon
condition that they pay 1 percent of their pay roll into the general
State fund. We further advise that if " contracting out " is per­
mitted, the State law should contain provisions under which em­
ployees will not lose their unused benefit rights, or any contribu­
tions which they may have made to such accounts above benefits
received when they voluntarily leave the employ of an employer
with a separate reserve account, lest such accounts operate to inter­
fere with the mobility of labor. Experimentation with individual
industry and company reserve accounts under proper restrictions
will undoubtedly be permitted in some States; therefore, the impor­
tance of adequately safeguarding both the rights of the workers and
the pooled State funds is emphasized.
We are opposed to any provision in the Federal act under which
any industries or companies are exempted from State laws prescribing
an exclusive State pooled fund.
Guaranteed employrnent.-Guaranteed employment is a device
which, if properly safeguarded, will effectually secure all of the pur­
poses of unemployment compensation. There would be no unem­
ployment problem if all workers were guaranteed a sufficient annual
wage. We feel it to be desirable that employers be permitted to
experiment with guaranteed employment under the State laws, but
also that such experiments should be conducted only under safeguards.
Guaranteed employment, we believe, should be recognized as a reason
for reduced contribution in State laws, only if the employees get at
least as much protection as that afforded to employees by unemploy­
ment compensation. The period of guaranteed employment, when
it is claimed as ani offset, should be for at least 40 weeks of full-time
 REPORT OF' THE COMMITTEE ON ECONOMIC SECURITY 23
employment during the year, although less than full-time employ­
ment may be counted toward fulfillment of the guaranty, if the num­
ber of weeks of guaranteed employment is correspondingly increased.
Employees should be further protected by a provision in State laws
under which they will receive at least half of the normal unemploy­
ment compensation benefits if they lose employment at the end of the
guaranty period. Employers claiming contribution credits by guar­
anteeing employment should be permitted to do so only if the
plan includes all their employees or all employees of entire plants.
They should be required to make some contribution to the pooled
State unemployment compensation fund and should be entitled to
additional credits against the Federal tax only if they fulfill all obli­
gations of their guaranty and have accumulated an adequate reserve.
Sufficient security should be required by the State authority to insure
fulfillment of the guaranty.
GENERAL COMMENTS

The plan of unemployment compensation, we suggest, is frankly

experimental. We anticipate that it may require numerous changes
with experience, and, we believe, is so set up that these changes can
be made through subsequent legislation as deemed necessary. If we
are to wait until everyone interested in the subject is in agreement
as to what is a perfect measure before enacting unemployment com­
pensation legislation, there will be a long and unwarranted post­
ponement of action.
The plan we suggest is one that will secure the much-needed ex­
perience necessary for the development of a more nearly perfect
system. It is in accord with American traditions and the message of
the President which initiated our study of this subject.
We submit that the Federal part of the program should be enacted
into law by the Congress at the earliest date possible. This is
urgently necessary if the State legislatures are to act in time to per­
mit the legislation to go into effect January 1, 1936. In the coming
year, 44 of the 48 States will hold regular sessions of their legisla­
tures. Most of these will convene in January, and will be in session
3 months or less. Unemployment compensation in this country will
suffer another year of delay unless there is prompt action by the
Congress.
OLD-AGE SECURITY
THE OLD-AGE PROBL.EM

In 1930 there were 6,500,000 people over 65 years of age in this

country, representing 5.4 percent of the entire population. This per­
centage has been increasing quite rapidly since the turn of the ceDn­
24 REPORT OP THEZ COMMITTEE ON ECONOMIC sECuRITY

tury and is expected to continue to increase for several decades. It is

predicted, on the basis of the present population and trends, that by
1940, 6.3 percent of the population will be 65 years of age; by 1960,
9.3 percent; and by 1975, 10 percent. In 25 to 30 years the actual
number of old people will have doubled, and this estimate does not
take into account the possibility of a decrease in the mortality rate,
which would further increase the total.
No even reasonably complete data are available regarding the
means of support of aged persons, and the number in receipt of some
form of public charity is not definitely known. The last almshouse
survey was made more than 10 years ago, and the number of people
in institutions of this kind can only be approximated. There are
about 700,000 people over 65 years of age on F. E. R. A. relief lists,
and the present cost of the relief extended to these people has been
roughly estimated at $45,000,000 per year. In addition there are a
not definitely known but large number of old people in receipt of
relief who are not on F. E. R. A. relief lists. All told, the number of
old people now in receipt of public charity is probably in excess of
1,000,000.
The number in receipt of some form of pension is much smaller.
Approximately 180,000 old people, most of them over TO' years of age,
are receiving pensions under the State old-age assistance laws, the
average pension last year being $19.74 per month.
A somewhat smaller number of the aged are receiving public
retirement or veterans' pensions, for which the expenditures exceed
those under the general old-age assistance laws. Approximately
150,000 aged people are in receipt of industrial and trade-union
pensions, the cost of which exceeds $100,000,000 per year.
The number of the aged without means of self-support is much
larger than the number receiving pensions or public, assistance in
any form. Upon this point the available data are confined to sur­
veys made in a few States, most of them quite a few years ago.
Connecticut (1932) and New York (1929) found that nearly 50
percent of their aged population (65 years of age and over) had an
income of less than $25 per month; 34 percent in Connecticut had no
income whatsoever. Akt this time a conservative estimate is that
at least one-half of the approximately 7,500,000 people over 65 years
now living are dependent.
Children, friends, and relatives have borne and still carry the
major cost of supporting the aged. Several of the State surveys
have, disclosed that from 30 percent to 50 percent of the people
over 65 years of age were being supported in this way. During
the present depression, this burden has become unbearable for many
of the children, with the result that the number of old people de­
pendent upon public or private charity has greatly increased.
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 25
The depression will inevitably increase the old-age problem of the
next decades. Many children who previously supported their parents
have been compelled to cease doing so, and the great majority will
probably never resume this load. The depression has largely wiped
out wage earners' savings and has deprived millions of workers past
middle life of their jobs, with but uncertain prospects of ever again
returning to steady employment. For years there has been some
tendency toward a decrease in the percentage of old people gainfully
employed. Employment difficulties for middle-aged and older
workers have been increasing, and there is little possibility that there
will be a reversal of this trend in the near future.
Men who reach 65 still have on the average 11 or 12 years of life
before them; women, 15 years. A man of 65, to provide an income
of $25 per month for the rest of his life (computing interest at 3 per­
cent) must have accumulated approximately $3,300; a woman nearly
$3,600. If only this amount of income is allowed to all of the people
of 65 years and over, the cost of support of the aged would represent
a claim upon current national production of $2,000,000,000 per year.
Regardless of what may be done to improve their condition, this
cost of supporting the aged will continue to increase. In another
generation it will be at least double the present total.
GENERAL OUTLINE OF RECOMMENDATIONS

An adequate old-age security program involves a combination of

noncontributory pensions and contributory annuities. Only noncon­
tributory pensions can serve to meet the problem of millions of per­
sons who are already superannuated or shortly will be so and are
without sufficient income for a decent subsistence. A contributory
annuity system, while of little or no value to people now in these
older age groups, will enable younger workers, with the aid of their
employers, to build up gradually their rights to annuities in their
old age. Without such a contributory system the cost of pensions
would, in the future, be overwhelming. Contributory annuities are
unquestionably preferable to noncontributory pensions. They come
to the workers as a right, whereas the noncontributory pensions must
be conditioned upon a " means " test. Annuities, moreover, can be
ample for a comfortable existence, bearing some relation to custom­
ary wage standards, while gratuitous pensions can provide only a
decent subsistence.
Difficult administrative problems must be solved before people
who are not wage earners and salaried employees can be brought
under the compulsory system, and it is to be expected that some
people from higher income groups will come to financial grief and
dependence in old age. Until literally all people are brought under
115795-_85---4_
26 REPORT OF VtH COMMITTEE ON ECONOMIC SECURITy

the contributory system, noncontributory pensions will have a

definite place even in long-time old-ago-security planning.
There also is need for a voluntary system of annuities to supple­
ment the compulsory system we advocate, intended primarily for
persons of low and moderate income who are not included in the
compulsory system. While the latter is not as important as the non­
contributory pensions and the compulsory system of contributory
annuities, we recommend the establishment of a related, but distinct,
voluntary system of Government old-age annuities, for restricted
groups in the population who do not customarily purchase annuities
from commercial insurance companies.
Finally, in any complete program for old-age security, those aged
should be considered who must be cared for in institutions-those
who need custodial care which friends and relatives will not provide.
Factual data bearing on the institutions for the care of the aged
and their inmates are very scant and most of them out of date. We
therefore recommend that the United States Department of Labor
undertake at once a special survey of such institutions for the pur­
pose of developing a constructive program for the improvement of
institutional maintenance of the aged.
NONCONTRrIBUTORTr OWD-AGB PENSIONS

Old-age pensions axe recognized the world over as the best means
of providing for old people who are dependent upon the public for
support and who do not need institutional care. In this country 28
States and 2 Territories now have laws providing for the payment
of noncontributory pensions to dependent aged persons. The min­
imum age specified in these laws is either 65 or 70. All of them re­
quire long periods of residence within the State and allow pensions
only if the aged applicants are without any substantial amount of
property or income and have no relatives legally responsible for their
support. In most of these acts the pensions are limited to a maxi­
mum of $1 per day less any other income the pensioners may receive
from any source. A few of the laws are less restrictive, but not
more than two or three of the entire number can be regarded as even
reasonably adequate. The administrative provisions in many of the
laws are likewise defective; the officials who grant the pensions have
no facilities for investigation and there is no machinery for super­
vision. Many laws place the entire cost of pensions on the local
governments, and about one-third of these acts are optional in the
sense that counties may or may not, operate under the pension Sys­
tem as they see fit.
Many of these old-age-pension laws are entirely nonfunctioning;
many pension authorities because of financial pressure have cut bene­
fits below a proper minimum, and there are long waiting lists of
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 27
needy persons. While some improvement along these lines is to be
expected with the insistent popular demand for old-age pensions;
financial limitations are such that local and State action alone can­
not be relied upon to provide either adequate or universal old-age
assistance.
As has been stated, there are four times as many old people over
65 on relief lists as are in receipt of old-age pensions. These aged
people do not belong on emergency-relief lists and, very properly, are
now being eliminated therefrom. They should, instead, be provided
for under old-age pension laws, operating in all States.
There is little likelihood, however, that an appreciable number of
the dependent aged will receive pensions unless the financing of such
measures is put on a radically different basis than at present. Both
State and Federal participation are vita~l if the dependent aged are to
be cared for through the human pension method.
Federal grants-in-aid will encourage the enactment of liberal old-
age pension laws in all States and the granting of pensions to all
of the aged who are dependent upon the public for support and who
do not need institutional care. We, therefore, recommend a syste~m
of Federal grants-in-aid to States and Territories which provide
old-age assistance for their needy aged under plans approved by the
Federal Emergency Relief Administration or its successor agency.
These grants-in-aid, we suggest, should be one-half of the total ex­
penditures for old-age pensions, including administrative expenses,
but with a proviso limiting the Federal subsidy to $15 per month for
any individual and the aid for administrative expenses to 5 percent
of the State's total expenditures for old-age assistance.
Conditions of grants
Since the Federal Government, under the plan we recommend, is
to assume one-half the cost of old-age pensions, we deem it proper
that it should require State legislation and administration which
will insure to all of the needy aged pensions adequate for their sup­
port. We recommend that aid be granted only to those States which
enact laws that are state-wide or territory-wide in scope, and, if
administered by political subdivisions, are mandatory upon them.
Such laws may limit the granting of pensions to citizens of the
United States and residents of the State or Territory, but may not
require a longer period of residence than 5 years, within the last 10
years preceding the application for a pension. Property and income
limitations may, likewise, be prescribed but no aged person other­
wise eligible may be denied a pension whose property does not ex­
ceed $5,000 in value, or whose income is not larger than is necessary
for a reasonable subsistence compatible with decency and health.
The pension to be allowed must be an amount sufficient, with the&
28 REPORT OP THE COMMITTEE ON ECONOMIC SECURITY

other income of the pensioner, for such a reasonable subsistence.

Federal grants-in-aid are to be paid only on account of pensions
granted to persons over 65 years of age but until January 1, 1940,
States may maintain a 70-year age limit, which must thereafter be
reduced to 65. No Federal aid is to be extended for aged person~s
cared for in institutions, and so much of the total pensions paid to
any pensioner as was derived from the United States Government
shall constitute a lien on the estate of the aged recipient, which,
uI)of his death shall be enforced by the State or Territory and
refunded to the Federal Government. The administration of the
old-age pension laws must be under the supervision of a designated
State department, and must be so conducted as to insure fulfillment
of the intent of the Federal grants-in-aid; namely, to give all de­
pe~ndent aged persons not in need of institutional care a decent
susistence in their own homes.
Costs
Only approximate estimates can be given regarding the costs of
the proposed grants-in-aid. If a compulsory contributory annuity
system is not established at the same timne, actu~arial estimates indicate
that the Federal share of the cost of the noncontributory old-age
pensions may in the first year reach a total of $136,600,000; in the
second year, $199,000,000, and would increase steadily thereafter
until it reaches amaximumnof $1,294,300,000 byl1980. We believe that
these estimates are too high, particularly in the earlier years, as they
do not allow sufficiently for the lagr likely to occur before all the
dependent aged will actually be granted pensions. Since the total
now expended for old-age pensions is less than $40,000,000 per year,
and more than half of the entire population of the country is in
States which have old-agge pension laws, we are of the opinion that
$50,000,000 will be sufficient in the first year to pay the Federal share
of the old-age-pension costs. Thereafter, this figure will tend to
increase rather rapidly and by 1980 may reach the great total
estim~ated by the actuaries. The estimates of the actuaries consulted
by this committee are, in our judgment, so high in estimated figures
for 1980 that further careful studies must be given to them, with
the objective of finding ways and means for reduction and limi­
tation of estimated Government contributions as of that year.
Obviously these figures will be rednced if a compulsory system of
contributory annuities is established simultaneously with the Federal
grants-in-aid. Sound financing demands this simultaneous action.
The estimates of the actuaries indicate that if a compulsory system
of contributory annuities is started by January 1, 1937, Federal
grants-in-aid to the noncoftributory pensions will by 1980 total less
than 40 percent of the amount they will reach by that date if a
conitributory system is not started.
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 29
Furthermore, the actuarial figures assume that contributory an­
nuities will not cover a large percentage of our population compris­
ing those who are not actual wage earners. It is essential that as
soon as possible these persons be brought into the compulsory sys­
tem of contributory annuities, else the annual Government contribu­
tions will be so higrh as to constitute an impossible charge on the
taxpayers.
CONTRIBUTORY ANNUITIES (COMPULSORY SYSTEM)

It is only through a compulsory, contributory system of old-age

annul'ties that the burden upon future generations of the support
of the aged can be lightened. With an increasing number and even
more rapidly increasing percentege of the aged, the cost of sup­
porting old persons will be a heavy load on future generations re­
gardless of any legislation that may be enacted. Pensions sufficient
for a decent subsistence for all of the aged who are dependent upon
the public for support are approved by the overwhelming majority
of the people of this country. In order to reduce the pension cost.$
and also to more adequately provide for the needs of those not yet
old hut who will become old in time, we recommend 'a contributory
annuity system on a compulsory basis, to be conducted by' the Fed­
eral Government. Because of the large number of people involved
and the other duties imposed on the Social Insurance Board (which
we recommend should have responsibility for the administration of
all types of social insurance), we deem it desirable that the taxes
to finance this system should not become effective until January 1,
1937, but believe that the necessary legislation should be enacted
at an early date, to enable the Board to make the necessary studies
and other preparations for putting this plan into operation.
Outline of plan
We recommend that the contributory annuity system include, on a
compulsory basis, all manual workers and nonmanual workers earn­
ingo less than $250 per month, except those of governmental units
and those covered by the United States Railroad Retirement Act.
(In the first 5 years that the act is in effect only employees who on
the effective date are less than 60 years of age are to be included.)
Employees who lose compulsory coverage (by becoming employers,
ceasing to work, etc.) after they have made at least 200 weekly con­
tributions are to be permitted to continue membership on a voluntary
basis by paying a contribution equal to the combined contributions
required from emnployers and employees.
The compulsory contributions are to be collected through a tax on
pay rolls and wages, to be divided equally between the employers and
employees. To keep the reserves within manageable limits, we sug'
 ~O REPORT OF THE commITTEE, ON ECONOMIC SECURIT

gest that the combined rate of employers and employees be 1 percent

in the. first 5 years the system is in effect; 2 percent in the second
5 years; 3 percent in the third 5 years; 4 percent in the fourth 5 years
and 5 percent thereafter. If it is deemed desirable to reduce the
burden of the system upon future generations, the initial rate may
well be doubled a~nd the taking effect of each higher rate advanced
by 5 years.
Both the tax on employers and the employees is to be collected
through the employers, who shall be entitled to deduct the amount
paid in the employees' behalf from wages due them. The necessary
rules and regulations for collection of contributions are to be pre­
scribed by the Secretary of the Treasury.
We suggest that the Federal Government make no contribution
from general tax revenues to the fund during the years in which
income exceeds payment from the funds, but that it guarantee to
make contributions, when the level of payment exceeds income from
contributions and interest, sufficient to maintain the reserve at the
level of the last year in which income exceeded payments. According
to our actuarial estimates the re-serve on this basis would be main­
tained at about $15,25,000,000.
No benefits are to be paid until after the system has been in opera­
tion for 5 years, nor to any person who has not made at least 200
weekly contributions, nor before the member has reached the age of
65 and retired from gainful employment. Persons retiring after
having passed the age of 65 will receive only the same pension as if
they had retired at that age. The benefits are normally to take the
form of annuities payable during the remainder of the life of the
annuitant. Should a member die before the age of 65 or before
the amount of his own contributions has been paid to him as an
annuity, the difference between his contributions and the amount
which he may have received as an annuity, with interest at 3 percent,
is to be paid as a death benefit to his dependents. 'Members who have
made contributions for a short time but who, on reaching the age of
65 are not entitled to an annuity (because they have not made 200
contributions) are to be refunded their own contributions with 3 per­
cent interest.
Under one proposal considered by the committee , the annuity
payable to members in whose behalf contributions are first paid
during the years 1937 to 1941 shall be computed as follows: If
they are eligible to retirement in the sixth year after becoming
members, their annuity shall be equal to 15 percent of the average
weekly wage during the period they have been within the system, not
counting that portion of the wage in excess of $150 per month. For'
those retiring in the next 5 years this annuity is to be increased
by 1 percent of the average weekly wage for each additional
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 31.
40 weeks of contributions, but. the increase shall not exceed 1 percent
for each year of membership in the system. Thereafter the, initial
annuity is to be increased by 2 percent for each 40 weekly contribu­
tions, but not more than 2 percent per year, until a maximum pension
of 40 percent of the first $150 average monthly wages, upon which
contributions have been paid shall be reached.
The minimum annuity payable to persons in whose behalf contri­
butions are first paid in 1942 or subsequent thereto shall on retirement
at age 65 or over and after 200 weekly contributions be 10 percent
of the first $150 average monthly wages upon which contributions
have been paid. To this 10 percent shall be added 1 percent for each
40 weekly contributions subsequent to the first 200 payments made
within the first 5 years of membership in the system, but not to exceed
1 percent for each year of membership after the qualifying period of
5 years.
An annuitant with a spouse, if hie or she so desires, may chose in
lieu of an annuity on the basis outlined, an actuarially equivalent
joint survivorship annuity. In all cases, also, members shall not
receive less than the actuarial equivalent of their own contribution.
The administration of the compulsory old-age annuity system we
recommend should be vested in the Social Insurance Board. All
reserve funds of the system, however, shall be invested and managed
by the Secretary of the Treasury, on the same basis as the unemploy­
ment compensation funds.
32 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY

Under the plan suggested, however, no payments will actually be

made by the Federal Government until 1965, and will, of course, be
greater than they would be if paid as incurred, by the amount of the
compound interest on the above sum. This plan, thus, involves the
creation of a debt upon which future generations will have to pay
large amounts annually, the Federal contributions representing the
interest at 3 percent on the debt thus incurred to pay (partially)
unearned annuities in the early years of the system.
While the creation of this debt will impose a burden on future
generations which we do not wish to minimize, we, nevertheless,
deem it advisable that the Federal Government should not pay its
share of the cost of old-age annuities (the unearned part of annui­
ties to persons brought into the system at the outset) currently. To
do so would create a reserve which would reach a total of about
$75,000,000,000. Further, to pay this cost now would unfairly bur­
den the younger part of the present generation, which would not
only pay for the cost of its own annuities but would also pay a
large part of the annuities to the people now middle-aged or over.
Expressed differently, the plan we advocate amounts to having
each generation pay for the support of the people then living who
are old. However, we favor showing the debtA to the fund currently
incurred by the Government, which debts should be evidenced by
formal Government obligations issued to the fund. We accordingly
recommend that an actuarial audit of the annuity fund be made
and published annually which shall set forth clearly the present
status of the fund taking into account future payments and future
income and will show the present worth of the obligations being
incurred by the Federal Government.
This plan also contemplates only small contributions by employers
and employees during the early years of the system. Somewhat
larger payments in the early years may be advisable, to reduce the
necessary Government contributions later on. If the initial rate
were increased to 1 p~ercent each on employers and employees and
each higher rate come into operation 5 years earlier than we recom­
mend (which is modification of our plan that has considerable
merit), the reserve funds would at the maximum amount to
$28,200,000,000, and the ultimate Federal contribution decreased by
$350,000,000 per year.
Costs
Actuarial estimates based on the plan we have described indicate
that the income of the compulsory annuity fund will in the first
5 years that the system is in operation amount to a little more than
$300,000,000. With increases in rates and interest earnings on the
reserve this income will increase quite rapidly until by 1980 it will
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 33
amount to $2,200,000,000 per year. Benefit payments will be light
in the early years, but will increase steadily until by 1965 they will
exceed the annual receipts. It is at this stage, that the Federal Gov­
ernment would begin to make contributions to the annuity system,
which, under the figures submitted by the actuaries reach a maxi­
mum of above $1,400,000,000 per year by 1980. (These contributions
by the Federal Government, as has been stated, represent the un­
earned part of the pensions paid to people now approaching old age,
with interest on these amounts calculated at 3 percent).
We realize that there may be valid objection to this plan, in that
it involves too great acost upon future generations. This cost can be
reduced by putting the rate of 5 percent into effect at an earlier
date; it can be entirely eliminated only through not paying any annu­
ities that have not been fully earned. If the Congress deems it ad­
visable to make either or both of these changes, we are prepared to
suggest (letailed plans for doing so.
Instead of a Government subsidy to the contributory annuity sys­
tern it may be advisable to supplement the earned annuities of people
now old (and whose earned annuities are, therefore small) by grant­
ing them assistance under noncontributory old-age pension laws, on
a more liberal basis than in the case of persons who have accumulated
no rights under the contributory annuity system. Thus, one of the
required provisions of a State old-age pension law might be that in
no event, prior to the year 1960, shall an annuity to which a person is
entitled under the contributory annuity system be taken into account
in determining the need of such person for assistance.
In considering the costs of the contributory system, it should not
be overlooked that old-age annuities are designed to prevent destitu­
tion and dependency. Destitution and dependency are enormously
expensive, not only in the initial cost -of necessary assistance but
in the disastrous psychological effect of relief upon the recipients,
which, in turn, breeds more dependency.
The contributions required from employers and employees have an
equally good justification. Contributions by the employees represent
a self-respecting method through which workers make their own
provision for old age. In addition many workers themselves on
the verge of dependency will benefit through being relieved of the
necessity of supporting dependent parents on reduced incomes, and
at the expense of the health and well-being of their own families.
To the employers, contributions toward old-age annuities are very
similar to the revenues which they regularly set aside for depre­
ciation on capital equipment. There can be no escape from the
costs of old age, and, since these costs must be met, an orderly '9ys­
tern under which employers, employees, and the Government will all
34 REPORT OF THE COMMITTEE ON ECONOMIC sECURITy

contribute appears to be the dignified and intelligent solution of the

problem.
VOLUNTARY OLD-AGE ANNUITIES

The voluntary system of old-age annuities we suggest as a sup­

plement to the compulsory plan contemplates that the Government
shall sell to individuals on a cost basis deferred life annuities simi­
ilar to those issued by commercial insurance companies; that is, in
consideration of premiums paid at specified ages, the Government
would guarantee the purchasers a definite amount of income starting
at 65 for example, and continuing throughout the lifetime of the
annuitant. The primary purpose of the plan is to offer persons not
included within the compulsory system a systematic and safe method
of providing for their old age. It could also be used by insured
persons as a means of supplementing the old-age income provided
under the compulsory plan.
Without attempting to outline in detail the terms under which
Government annuities should be sold, it is believed that a satisfactory
find workable plan, based on the following principles, could be de­
veloped without great difficulty:
1. The plan should be self-supporting, and premiums and bene­
fits should be kept in actuarial balance by any necessary revision of
the rates which periodic examinations of the experience -would
indicate.
2. The terms of the plan should be kept as simple as practicable
in the interest of economical administration and to minimize mis­
understanding on the part of individuals utilizing these arrange­
mernts. This could be accomplished by limiting the types of annuity
offered to two or three of the most important standard forms.
3. The plan should be designed primarily for the same income
groups as those covered by compulsory system; hence, provision
should be made for the acceptance of relatively small premiums
(as little as $1 per month) and the maximum annuity payable to
any individual should be limited to the actuarial equivalent of $50
per month.
4. The plan should be administered by the social insurance board
along with the compulsory old-age insurance system, but as a sepa­
rate undertaking.
5. The social insurance board should study the feasibility of Gov­
ermnent contribution toward the annuities of people now middle
aged or older with income of $2,500 per year or less who come under
this voluntary plan, comparable to the unearned part of the annuities
which will be paid by the Government to people of middle age or
older who are brought under the compulsory system. This is but a
fair deal to farm owners and tenants, self-employed persons and
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 35
other people of small incomes whose economic situation may be not
one whit better than that of many workecrs covered by the corn pul­
sory system. Further study will be necessary, however, before a
practical method of accomplishing this purpose can be sug-gested,
one which will avoid the danger of benefiting those persons who
need assistance least.

SECURITY FOR CHILDREN

It must not for a moment be forgotten that the core of any social
plan must be the child. Every proposition we make must adhere to
this core. Old-age pensions are in a real sense measures in behalf
of children. They shift the retroatcive burdens to shoulders which
can bear them wvith less human cost, and young parents thus released
can put at the disposal of the new member of society those family
resources he must be permitted to enjoy if he is to become a strong
person, unburdensome to the State. Health measures that protect
his family from sickness and remove the menacing apprehension of
debt, always present in the mind the breadwinner, are child-welfare
measures. Likewise, unemployment compensation is a, measure in
behalf of children in that it protects the home. Most important of
aj1, public-job assurance which can hold the family together over
long or repetitive periods of private unemployment is a measure for
children in that it assures them a childhood rather than the prema­
ture strains of the would-be child breadwinner.
There are at the moment over 7,400,000 children under 16 years of
age on the relief rolls. The lives of some of these children, who
have never known a time when their father had a steady job, and
who, until Federal relief provided the family with a weak cohesive
agent, have known nothing but the threat of being scattered, are lost
beyond full restoration to their physical and social fulfillment.
Their childhood is already destroyed and their future dark and un­
certain. In this age group are 300,000 dependent and neglected chil­
dren; 300,000 to 500,000 children who are physically handicapped;
200,000 who come as delinquents annually before the courts; and the
75,000 illegitimate children born each year. Special kinds of care
must be provided for them to save them from a future more tragic
than their impaired childhood.
Most of the children on relief lists are less conspicuously unfor­
tunate, but all of them lack at least one major essential for a child­
hood which will prepare them in 5, 10, or 15 years to be the mainstay of
society. Nothing is wrong with their environment but their parents'
lack of money to give them opportunities which are taken for granted
in more fortunate homes.
36 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY

AID TO FATHERLESS CHILDREN

Among these children most especial attention must be given to

the children deprived of a father's support usually designated as the
objects of mothers' aid or mothers' pension laws, of whom there are
now above 700,000 on relief lists. The very phrases " mothers' aid "
and " mothers' pensions " place an emphasis equivalent to miscon­
struction of the intention of these laws. These are not primarily
ai'ds to mothers but defense measures for children. They are
designed to release from the wage-earning role the person whose
natural function is to give her children the physical and affectionate
guardianship necess.ary not alone to keep them from falling into
social misfortune, but more affirmatively to rear them into citizens
capable of contributing to society.
Legislation for" mothers' pensions " has been in operation in this
country for Inole than 20 years. Such laws exist in 45 States. Yet
less than one-third the number of similar families on relief are now
actually receiving Inothers' pensions. The cost of these pensions is
$,37.200,000 a year. Six million dollars of this comes from State
g~ov erninents; local units supply the balance. Less than one-half of
the local units authorized to grant mothers' aid are actually doing so.
Many others are granting amounts insufficient to defend the children
involved. Part of this situation is due to indifference, but in part it
is due to the poverty of many local governmental units and to the
fact that the Federal Government has been paying the major costs
when fatherless families are placed on relief, whereas it makes no
contribution to mothers' aid.
When the Federal Government terminates Federal relief , the situa­
tion will become immeasurably worse. Neither the return of pros­
perity nor any of the measures suggested in this report will meet the
problem. Mothers' pensions will only partially and inadequately
do so as long as the cost falls almost entirely on local governmental
units. To meet the situation effectually increased State appropria­
tions and Federal grants-in-aid are essential.
Such Federal grants-in-aid are a new departure, but it is impera­
tive to give them, if the mothers' care method of rearing fatherless
families is to become nation-ally operative. The amount of money
required is less than the amount now given to families of this charac­
ter by the Federal Government by the less desirable route of emer­
gency relief. An initial appropriation of approximately $25,000,000
per year is believed to be sufficient. If the principle is adopted of
making grants equal to one-half of the State and local expenditures
(one-third of the total cost), with special assistance to States tempo­
rarily incapacitated, this sum might in time rise to a possible
$50,000,000. Federal grants should be made conditional on passage
and enforcement of mandatory State laws and on the submission of
 REPORT OF THE COMMITTEE ON~ECONOMIC SECURITY 37
approved plans assuring minimum standards in investigation,
amounts of grants, and administration. After a specified date State
financial participation should be insisted upon. This might take the
form either of equalization grants to local units or of per capita
grants, as the several States may prefer.
CHILD CARE SERVICES

Local services for the protection and care of dependent and physi­
cally and mentally handicapped children are generally available in
large urban centers, but in less populous areas they are extremely
limited or even nonexistent. One-fourth of the States, only, have
made provisions on a State-wide basis for county child-welf are
boards or similar agencies, and in many of these States the services
are still inadequate. 'With the further depletion of resources during
the depression there has been much suffering among many children
because the services they need have been curtailed or even stopped.
To counteract this tendency and to stimulate action toward the
establishment of adequate State or local child-welfare services, a
small Federal grant-in-aid, we believe, would be very effective.
CHILD AND MATERNAL HEALTH SERVICES

The fact that the maternal mortality rate in this country is much
higher than that of nearly all other progressive countries suggests
the great need for Federal participation in a Nation-wide maternal
and child-health program. From 1922 to 1929 all but three States
participated in the successf ul operation of such a program. Fed­
eral fufnds were then withdrawn and as a consequence State ap­
propriations were materially reduced. Twenty-three States now
either have no special funds for maternal and child health or ap­
propriate for this purpose $10,000 or less. In the meantime, the6
need has become increasingly acute.
Crippled children and those suffering from chronic diseases such
as heart disease and tuberculosis constitute a regiment of whose
needs the country became acutely conscious only after the now
abandoned child and maternal health program was inaugurated.
In more than half the States some State and local funds are now
being devoted to the care of crippled children. This care includes
diagnostic clinics, hospitalization, and convalescent treatment. But
in nearly half the States nothing at all is now being done for these
children and in many the appropriations are so small as to take care
of a negligible number of children. Since hundreds of thousands
of children need this care the situation is niot only tragic but
dangerous.
38 REPORT OF THE COMMITTZE ON ECONOMIC SECURITY

We recommend that the Federal Government through the agency

of the Children's Bureau should again assume leadersh~ip in a
Nation-wide child and maternal health program. Such a program
should provide for an extension of maternal and child health serv­
ices, especially in rural areas. It should include (a) education of
parents and professional groups in maternal and child care; super­
vision of the health of expectant mothers, infants, pre-school and
school children, and children leaving school for work, (b) provi­
sion for transportation, hospitalization, and convalescent care of
crippled children in areas of less than 100,000 population. This
program should be developed in the States under the leadership of
the State departments of health in cooperation with medical and
public-welfare agencies and groups concerned with these problems.
Federal participation is vital to its success. It should take the form
of both grants-in-aid, and of consultative , educational, and promo­
tional work by the Children's Bureau in cooperation with the State
health departments.
The appropriation suggested by our Advisory Committee on Secu­
rity for Children of $7,000,000 per year is large in proportion to the
$41,139 now appropriated to the Children's Bureau for child and
maternal health work, But its cost is small when it is compared
with the expenditures for many purposes having far less direct rela­
tion to human welfare. Whether the precise amount suggested
should be appropriated is a matter for the determination of other
agencies. But we cannot too strongly recommend that the Federal
Government again recognize its obligation to participate in a
Nation-wide program saving the children from the forces of attri­
tion and decay which the depression turned upon them above all
others.
RISKS ARISING OUT OF ILL HEALTH

Illness is one of the major causes of economic insecurity which

threaten people of small means in good times as in bad. In normal
times from one-third to one-half of all dependency can be traced to
the economic effects of illness. The money loss caused by sickness
in families with less than $2,500 of income per year has been esti­
mated at a total of $2,400,000,000 per annum, of which $900,000,000
represents wage loss and $1,500,000,000 the expenses of medical care.
The seriousness of this hazard, however, lies less in the total loss
involved than in its unequal distribution. Nearly half of all people
suffer no illness during a normal year, but 7 percent have three or
more illnesses and nearly 15 percent have illnesses that disable them
for more than a week. Studies of the actual expenditures for medi­
cal care in a large number of urban families with incomes ranging
from $1,20 to $2,000 per year, relating to the years 1928 to 1931,
 REPORT OF THE COMMITTEE ON ECONO~MIC SECURITY 39
disclosed that of each 1,000 families, 218 had medical bills in excess
of $100 and 80 in excess of $200; among the 80, 16 had medical costs
ranging from $400 to $700, and 4, sickness bills amounting to more
than one-half of their incomes.
The figures cited explain why many millions of American families
live in dread of sickness. Families with small incomes are com­
pelled to sacrifice other essentials of decent living when serious
illness strikes some member, go without needed medical care, or
depend upon the gratuitous or near gratuitous services of doctors
and hospitals. A mere statement of this situation is sufficient to
show that it is both unfair to the medical profession and very costly
to the public.
PUBLIC HEALTH SERVICES

As stated by the medical advisory board of this committee, in a

brief progress report recently filed:
A logical step in dealing with the risks and losses of sickness is to begin by
preventing sickness so far as Is possible.
Much progress has been made in this respect, yet the fact remains
that despite great advances in medicine and public-health protection,
millions of our people are suffering from diseases and thousands die
annually from causes that are preventable. The mortality of adults
of middle and older ages has not been appreciably diminished.
With the changing age composition of our population the task of
health conservation must be broadened to include adults as well as
children. Even minimum public-health facilities and services do
not now exist in many large, areas. Of 3,000 counties, only 528 have
fuqll-tinme health supervision and only 21 percent of the local health
departments were rated in 1933 as having developed a personnel and
service providing a satisfactory minimum for the population and the
existing problems.
Evidence is accumulating that the health of a large proportion
of the population is being affected unfavorably by the depression.
The rate of disabling sickness in 1933 among families which had suf­
fered the most severe decline in income during the, period 1929 to
1932 was 60 percent higher than the rate in families whose incomes
were not reduced. For the first time in many decades the death rate,
in our large cities is higher this year than it was last year despite the
absence of any serious epidemics. In the face of these evidences of
increased need local appropriations for public health have been
decreased on the average by 20 percent since 1930. The average
per capita expenditures from tax funds for public health in 77 cities
in 1934 were 58 cents as contrasted with 71 cents in 1931. It is not,
too much to say that in many parts of the country the men a~nd
women in public-health work are very discouraged.
40 EXPORT OF THE COMMITTEE ON ECONOMIC SECURITY

In this situation there is great need for a Nation-wide pro'gram

for the extension of preventive public-health services. As was wel)
stated by the medical advisory board:
At the present time appropriations for publld-health work are Insufficient
in many communities, whereas a fuller application of modern preventive medi­
cine, made possible by larger public appropriations, would not only relleve
such suffering hut would also prove an actual financial economy. Federal
funds, expended through the several States, In association with their own
State and local public-health expenditures, are, In our opinion, necessary to
accomplish these purposes and we recommend that substantial grants be made.
In accord with these principles and following the specific sug­
gestions of the Advisory Committee on Public Health, we recom­
mend: (1) Grants-in-aid to local areas unable to finance public-
health programs with State and Jocal resources, to be allocated
through State departments of health; (2) direct aid to States in
the development of State health services and the training of per­
sonnel for State and local health work; (3) additional personnel
within the United States Public Health Service for the investiga­
tion of disease and sanitary problems which are of interstate or
national interest and the detailing of personnel to other Federal
bureaus and to States and localities. The Advisory Committee on
Public Health suggested that in order to carry out these policies
the total appropriation to the Public Health Service be increased
to $10,000,000 per year, in contrast with $5,000,000-4 cents per
capita-now spent by the Federal Government in all its departments
for human health services. The advisory committee also reported
that the needs of the country are considerably in excess of the addi­
tional expenditures suggested but expressed the view that a larger
amount cannot be efficiently spent until necessary additional per­
sonnel has been trained and further tests of practical procedures
have been made through which certain diseases can be more effec­
tively controlled. It. is not within our province to say whether the
precise amount suggested should be appropriated, but we strongly
endorse the recommendation for increased Federal participation in
the prevention of ill health.
It has long been recognized that the Federal, State, and local
Governments all have responsibilities for the protection of all of
the population against disease. The Federal Government has rec­
ognized its responsibility in this respect in the public-health activi­
ties of several of its departments. There also are well-established
precedents for Federal aid for State health administration and for
local public facilities, and for the loan of technical personnel to
States and localities. What we recommend involves no departure
from previous practices, but an extension of policies that have long
been followed and are of proven worth. What is contemplated is a
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 41
Nation-wide public-health program, financially and technically aided
by the Federal Government, but supported and administered by the
State and local health departments.
HEALTH INSURANCU

The development of more adequate public-health services is the

first and most inexpensive step in furnishing economic security
against illness. There remains the problem of enabling self-sup­
porting families of small and moderate means to budget against the
loss of wages on account of illness and against the costs of medical
services needed by their members. The nature of this problem and
the nature of the risks which it involves calls for an application of
the insurance principle to replace the variable and uncertain costs
for individuals by the fixed and predictable costs for large groups
of individuals.
Insurance against the costs of sickness is neither new nor novel.
In the United States we have had a long experience with sickness in­
surance both on a nonprofit and commercial basis. Both forms have
been inadequate in respect to the protection they furnish, and the
latter-commercial insurance--has in addition been too expensive for
people of small means. Voluntary insurance holds no promise of
being much more effective in the near future than it has been in
the past. Our only form of compulsory insurance has been that
which is provided against industrial accidents and occupational
diseases under the workmen's compensation laws. In contrast other
countries of the world have had experience with compulsory health
or sickness insurance applied to over a hundred million persons and
running over a period of more than 50 years. Nearly every large
and industrial country of the world except the United States has
applied the principle of insurance to the economic risks of illness.
The committee's staff has made an extensive review of insurance
against the risks of illness, including the experience which has
accumulated in the United Stater, and in other countries of the world.
Based upon these studies the staff has prepared a tentative plan of
insurance believed adequate for the needs of American citizens with
small means and appropriate to existing conditions in the United
States. From the very outset, however, our committee and its staff
have recognized that the successful operation of any such plan will
depend in large measure upon the provision of sound relations
between the insured population and the professional practitioners or
institutions furnishing medical services under the insurance plan.
We have accordingly submitted this tentative plan to our several
professional advisory groups organized for this purpose. These
advisory groups have requested an extension of time for the further
42 REPORT OF THE COMMITTEE ON ECONOMIC BECURITY

consideration of these tentative proposals, and such an extension has

been granted until March 1, 1935. In addition, arrangements have
been effected for close cooperative study between the committee's
technical staff and the technical experts of the American Medical
Association.
Until the results of these further studies are available, we cannot
present a specific plan of health insurance. It seems desirable, how­
ever, to advise the professions concerned and the general public of
the ma'in lines along which the studies are proceeding. These may
be indicated by the following broad principles and general observa­
tions which appear to be fundamental to the design of a sound plan
of health insurance.
1. The fundamental goals of health insurance are: (a) The pro­
vision of adequate health and medical services to the insured popu­
lation and their families; (b) the development of a system whereby
people are enabled to budgret the costs of wage loss and of medical
costs; (c) the assurance of reasorably adequate remuneration to med­
ical practitioners and institutions; (d) the development under pro­
fessional auspices of new incentives for improvement in the quality
of medical services.
2. In the administration of the services the medical professions
should be accorded responsibility for the control of professional per­
sonnel and procedures and for the maintenance and improvement of
the quality of service; practitioners should have broad freedom to
engage in insurance practice, to accept or reject patients, and to
choose the procedure of remuneration for their services; insured
persons should have freedom to choose their physicians and insti­
tutions; and the insurance plan shall recognize the continuance of
the private practice of medicine and of the allied professions.
3. Health insurance should exclude commercial or other interme­
diary agents between the insured population and the professional
agencies which serve them.
4. The insurance benefits must be considered in two broad classes:
(a) Cash payments in partial replacement of wage-loss due to sick­
ness and for maternity cases, and (b) health and medical services.
5. The administration of cash payments should be designed along
the same general lines as for unemployment insurance and, so far as
may be practical, should be linked with the administration of unem­
ployment benefits.
6. The administration of health and medical services should be
designed on a State-wide basis, under a Federal law of a permissive
character. The administrative provisions should be adapted to
agricultural and sparsely settled areas as well as to industrial sec­
tions, through the use of alternative procedures in raising the funds
and furnishing the services
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 43
'1. The costs of cash payments to serve in partial replacement of
wage loss are estimated as from 1 to 11,4 percent of pay roll.
8. The costs of health and medical services, under health insur­
ance, for the employed population with family earnings up to $3,000
a year, is not primarily a problem of finding new funds, but of
budgeting present expenditures so that each family or worker car­
ries an average risk rather than an uncertain risk. The population
to be covered is accustomed to expend, on the average, about 4½/per­
cent of its income for medical care.
9. Existing health and medical services provided by public funds
for certain diseases or for entire populations should be correlated
with the services required under the contributory plan of health
insurance.
10. Health and medical services for persons without income, now
mainly provided by public funds, could be absorbed into a contribu­
tory insurance system through the payment by relief or other public
agencies of adjusted contributions for these classes.
11. The role of the Federal Government is conceived to be prin­
cipally (a) to establish mninimum standards for health insurance
practice, and (b) to provide subsidies, grants, or other financial aids
or incentives to States which undertake the development of health
insurance systems which meet the Federal standards.
RESIDUAL RELIEF

Unemployment has become an agglomeration of many problems.

In the measures here proposed we are attempting to segregate and
provide for distinguishable groups in practical ways.
One of these large groups is often referred to as the " unemploy­
ables." This a vague term, the exact meaning of which varies with
the person making the classification. Employability is a matter of
degree; it involves not merely willingness and ability to work but
also the capacity to secure and hold a job suited to the individual.
Relatively few people regard themselves as unemployables, and,
outside of the oldest age groups, the sick, the widowed, and deserted
mothers, most adults would, in highly prosperous times, have some
employment.
The fact remains that even before the depression there were large
numbers of people who worked only intermittently, who might be
described as being on the verge of unemnployability-many of them
practically dependent on private or public charity. These people
are now all on relief lists, plus many others who, before the depres-.
sion, were steady workers but who have now been unemployed so
long that they are considered substandard from the point of view ol
emplofrability.
44 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY

There are also large numbers of young people who have not worked
or have worked but little in private employment since they left
school, primarily because they came into the industrial group during
the years of depression. Then there are the physically handicapped,
among whom unemployment has been particularly severe. Included
on, the relief lists also are an estimated total of 100,000 families in
" stranded industrial communities," where they have little liklihood
of ever again having steady employment. There are 300,000 im­
poverished farm families whose entire background is rural and whose
best chance of again becoming self-supporting lies on the farm.
Policies which we believe well calculated to rehabilitate many of
these groups are now being pursued by the Government. These
clearly need to be carried through and will require considerable time
for fruition. This is especially trte, of the program for rural reha.­
oi'litation and the special work and educational programs for the
unemployed young people. There are other serious jrrcblems, among
them those of populations attached to declining overmanned indus­
tries. Only through the active participation of the Federal Govern­
ment can these problems be solved and the many hundreds of thou­
sands of individuals involved be salvaged.
As for the genuine unemployables-or near unemployables-we
believe the sound policy is to return the responsibility for their
care and guidance to the States. In making this recommendation
we are not unmindful of the fact that the States differ greatly as
regards wealth and income. We recognize that it would impose
an impossible financial burden on many State and local govern­
ments if they were forced to assume the entire present relief costs.
That, however, is not what we propose. We suggest that the Fed­
eral Government shall assume primary responsibility for providing
work for those able and willing to work; also that it aid the States
in giving pensions to the dependent aged and to families without
breadwinners. We, likewise, contemplate the continued interest of
the Federal Government for a considerable time to come in rural
rehabilitation and other special problems beyond the capacity of
any single State. With the Federal Government carrying so much
of the burden for pure unemployment, the State and local govern­
ments we believe should resume responsibility for relief. The fam­
ilies that have always been partially or wholly dependent on others
for support can best be assisted through the tried procedures of
social case work, with its individualized treatment.
We are anxious, however, that the people who will continue to
need relief shall be given humane and intelligent care. Under the
stimulus of Federal grants, the administration of relief has been
modernized throughout the country. In this worst depression of all
time, human suffering has been alleviated much more adequately
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 45
than ever before. It is not too much to say that this is the only
great depression in which a majority of the people in need have
really received relief. It would be tragic if these gains were to be
lost.
There is some danger that this may occur. While the standards
of relief and administration have been so greatly improved in
these last years of stress and strain, the old poor laws remain on the
statute books of nearly all States. When relief is turned back to
the States it should be administered on a much higher plane than
that of the old poor laws.
The States should substitute modernized public assistance laws
for the ancient, outmoded poor laws. They should replace uncen­
tralized poor-law administrations with unified, efficient State and
local public-welfare departments such as already exist in some
States and for which all States have a nucleus in their State Emer­
gency Relief Administrations. The Federal Government should in­
sist as a condition of any grants in aid that standard relief prac­
tice shall be used and that the States who receive Federal moneys
preserve the gains that have been made, in the care and treatment
of the "unemployables." Informed public opinion can also do much
and we rely upon it to thus safeguard the welfare of these unfor­
tunate human beings and fellow citizens.
ADMINISTRATION

The Federal Government has long had important functions in re­

lation to social welfare. In the depression these activities have
grown apace, particularly in connection with relief. For some time
the Government has had the major responsibility for the assistance
to above one-sixth of the entire population of the country. Here­
after, the Federal Government will still have large and continuing
responsibility for many parts of the heretofore undifferentiated
relief problem and some of our recommendations contemplate ex­
pansion in Federal social-welfare activities.
Trhe importance which the social-welfare activities of the Federal
Government have assumed is such that they should clearly all be
administratively coordinated and related. The detailed working
out of such coordination does not fall within the scope of this com­
mittee, but we deem it important to direct attention to the desirabil­
ity of early action in this matter.

ACCIDENT COMPENSATION

Industrial accidents were the first of the major hazards of the

modern economic system against which safeguards were provided
in this country. These are represented on the one hand by safety
46 REPORT OF THE COMMITTEE ON ECONOMIC SECUBRITY

laws and orders and the voluntary efforts of employers to reduce

accidents, and, on the other, by the workmen's accident compensation
laws now in force in all but four States.
These safeguards have, on the whole, worked quite beneficially,
but we still have far too many industrial accidents, and the accident
compensation laws are sadly lacking in uniformity and many of them
are very inadequate. In view of the start we have made, substitu­
tion of the continental European form of contributory accident insur­
ance for our noncontributory accident compensation laws, national­
ization of accident compensation, or any other fundamental change
is unwarranted. There should be no complacency, however, regard­
ing either the progress we have made toward the prevention of
industrial accidents or the adequacy of our compensation laws.
In outlining a long-time program for economic security, we make
the following recommendations looking toward more adequately
meeting the hazard of industrial accidents.
(1) The Department of Labor should further extend its services
in promoting uniformity and raising the standards of both the
safety laws and the accident compensation laws of the several States
and their administration.
(2) The four States which do not now have accident compensa­
tion laws are urged to enact such laws, and passage of accident com­
pensation acts for railroad employees and maritime workers is
recommended.
EMPLOYMENT SERVICE
Great progress has been made in the last 18 months in the de­
velopment of a more efficient employment service in this country.
The National Reemployment Service, set up to facilitate enrolling
labor for Public Works projects, has been extended into every State.
Under the Wagner-Peyser Act, cooperative arrangements have been
developed in the majority of the leading industrial States for the
joint conduct of employment offices connected with the United States
Employment Service. Through insistence upon a merit basis for
selection, an efficient personnel is being developed within the Em­
ployment Service.
The Employment Service, however, will have to be still further
expanded and improved if the measures for economic security we
have suggested are to be put into efficient operation. It is through
the employment offices that the unemployment compensation bene­
fits and also the old-age annuities are to be paid. These offices must
function as efficient placement agencies if the "willingness-to-work"
test of eligibility for benefits in unemployment compensation is to
be made effective. They now function to select the employees on
Public Works projects and should have a similar relation to any
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 47
expanded public-employment program. Above all, the employment
offices should strive to become genuine clearing houses for all labor,
at which all unemployed workers will be registered and to which
employers will naturally turn when seeking employees.
To perform these important functions, a Nation-wide system of
employment offices is vital. The nucleus for such a system exists in
the United States Employment Service and the National Reemploy­
ment Service, which have always been combined " at headquarters "
and are now being consolidated in States where both have existed.
No fundamental change in the relation of the Federal and State
Governments to the employment offices is deemed necessary, but some
amendment of the Wagner-Peyser Act is needed to enable the
employment offices to perform all the functions our program contem­
plates. The larger funds required will come from. the portion of
the Federal pay-roll tax retained for administrative purposes.
Closely related to the development of a more efficient Employment
Service is the Federal regulation of private employment agencies
doing an interstate business. The interstate business of such private
agencies cannot be regulated by the States, and, for the protection
no less of the reputable agencies than of the workers, should be
strictly regulated by the Federal Government.

EDUCATIONAL AND REHABILITATION SERVICES

Education, training, and vocational guidance are of major im­

portance in obtaining economic security for the individual and the
Nation. And we have at various points in this report made brief
references to the importance of vocational guidance and training in
the readjustments which are necessary in a coordinated attack on
the problem of individual economic security. We here wish to fur­
ther emphasize that the educational and vocational equipment of
individuals is a major factor in their economic security.
At this time it is tragically evident that education and training
are not a guarantee against dependency and destitution. Yet there
is no reason for losing faith in our democratic system of education;
the existing situation merely has brought into bold relief the fact that
education, to fulfill its purposes, must be related much more than it
has been to the economic needs of individuals. It has become ap­
parent particularly that education cannot be regarded as completed
upon leaving school. It has brought out poignantly the difference
between schooling and education. In a day and age of rapidly
changing techniques and market demands, many people will find it
necessary to make readjustments long after they have first entered
industry. Adjustment of our educational content and technique to
this situation is a vital need in a long-range program for economic
security.
48 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY

In the years immediately ahead, when there is certain to be a

large problem in the economic rehabilitation of so many individuals,
there is a peculiar need for educational and training programs
which will help these worst victims of the depression to regain self-
respect and self-support. While men have so much leisure time,
those who can profit from further education and training should
be afforded an opportunity to make such use of their leisure. Par­
ticularly for the young workers and those who have little hope of
returning to their old occupations, the need for educational and
vocational training and retraining programs is clearly indicated.
Education has been regarded in this country as a responsibility
of the State and local gYovernments and should remain so. In the
joint attack on economic security which we suggest, Federal par­
ticipation, however, is most desirable. To a considerable extent
the Federal Government is already participating in this endeavor,
and we believe that it should continue to do so, if possible, on an
extended scale.
What to do with regard to the ariny of unemployed youths con­
tinues to be one of the gravest problems of this Nation. Obviously
what the great majority need is a chance to work at somne job, a
chance to (levelop skills and techniques. In any program of em­
ployinent they must be given their fair share of available jobs. For
many, however, a training program would be of great benefit. This
can be developed satisfactorily only with the assistance of the Fed­
eral Government. The local school facilities are not able to take
care of their normal tasks, and find it impossible to develop needed
vocational-training programs at all commensurate with this problem.
At this point, we desire to call special attention to the importance
of special programs for the physically handicapped, of whom there
are many millions in this country. Since the passage in 1920 of the
Federal Vocational Rehabilitation Act, the Government has been
assisting the States in a service of individual preparation for and
placement in employment of persons vocationally handicapped
through industrial or public accident, disease, or congenital causes.
Forty-five States are now participating in this program and, since
it was launched, approximately 68,000 permanently disabled per­
sons have benefited from this service. The work done has shown
gratifying annual increases, even in the depression, but is still small
in comparison with the need. The desirability of continuing this
program and correlating it with existing and contemplated services
to workers in the general program of economic security we believe
to be most evident.
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 49
OTHER MEASURES FOR ECONOMIC SECURITY

We have expressed our views upon many different measures and

policies which we deem essential in a program to protect individuals
against the many hazards which lead to destitution and dependency,
but we have by no means exhausted the subject. We have dealt
with the hazards which afflict the largest numbers-unemployment,
old age, ill health, premature loss of the family breadwinner, indus­
trial accidents, lack of training-but we have not dealt with other
hazards equally serious for some individuals, such as invalidity,
nonindustrial accidents, and other afflictions.
Parts of the program we suggest apply to practically the entire
population, particularly the grants-in-aid to the noncontributory
old-age pensions, the expansion of preventive public-health serv­
ices, the aid to mothers' pensions, the maternal and child-health
services for rural areas, the services for crippled children, the ex­
pansion of the Employment Service, and the policy of employment
assurance. Two of the major measures suggested--old,-age insur­
ance and unemployment compensation-have more limited applica­
tion. The former will apply to all employed persons, but will not
include in its compulsory provisions proprietors, tenants, or the self-
employed. Unemployment compensation will have slightly nar­
rower scope, excluding those in small establishments.
Agricultural workers, domestic servants, home workers, and the
many self-employed people constitute large groups in the population
who have generally received little attention. In these groups are
many who are at the very bottom of the economic scale. 'We believe
that miore attention will have to be given to these groups than they
have received heretofore. We cannot be satisfied that we have a
reasonably complete program for economic security unless some de­
gree of protection is given these groups now generally neglected.
While in the short space of a few months we have made a quite
comprehensive survey of the entire problem of economic security
for the individual, much further thought needs to be given to many
aspects of this problem.
Study of the suggested problems not dealt with in this report and
still other aspects of a comprehensive economic security program be­
long logically among the duties of the social insurance board, if one
is established. So do problems of extending the coverage of unem­
ployment compensation and old-age insurance, and the task of cor­
relating the experience gained under these measures to make them
better instruments for the accomplishment of the purposes for which
they are designed.
50 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY

CONCLUSION

The program for economic security We Suggest follows no single

pattern. It is broader than social insurance and does not attempt
merely to copy European methods. In placing primary emphasis
on employment, rather than unemployment compensation, we differ
fundamentally from those who see social insurance as an all-sufficient
program for economic security. We recommend wide application
of the principles of social insurance, but not without deviation from
European models. Where other measures seemed more appropriate
to our background or present situation, we have not hesitated to
recommend them in preference to the European practices. In doing
so we have recommended the measures at this time which seemed
best calculated under our American conditions to protect individuals
in the years immediately ahead from hazards which plunge them into
destitution and dependency. This, we believe, is in accord with the
method of attaining the definite goal of the Government, social
justice, which was outlined in the message of January 4, 1935. " We
seek it through tested liberal traditions, through processes which
retain all of the deep essentials of that republican form of govern­
ment first given to a troubled world by the United States."
We realize that these measures we recommend will not give comn­
plete economic security. As outlined in the messages of June 8, 1934,
and January 4, 1935, the safeguards to which this report relates
represent but one of three major aspects of economic security for
men, women, and children. Nor do we regard this report and our
recommendations as exhaustive of the particular aspect which this
committee was directed to study--"the major hazards and vicissi­
tudes of life." A complete program of economic security " because
of many lost years, will take many future years to fulfill."
The initial steps to bring this program into operation should be
taken now. This program will involve considerable cost, but this is
small as compared with the enormous cost of insecurity. The meas­
ures we suggest should result in the long run in material reduction
in the cost to society of destitution and dependency, and we believe,
will immediately be helpf ul in allaying those fears which open the
door to unsound proposals. The program will promote social and
industrial stability and will operate to enlarge and make steady a
widely diffused purchasing power upon which depends the high
American standard of living and the internal market for our mass
production, industry, and agriculture.
 APPENDIX

LIST OF COMMITTEES ADVISORY TO THE COMMITTEE ON

ECONOMIC SECURITY
ADVISORY COUNCIL

Frank P. Graham, president University of North Carolina, Chapel HUI, N. C..

chaIrman.
Paul Kellogg, editor The Survey, New York City, vice chairman.
Gerard Swvope, president General Electric Co., New York City.
Morris E. Leeds, president Leeds & Northrup, Philadelphia, Pa.
Sam Lewlsohn, vice president Miami Copper Co., New York City.
Walter C. Teagle, president Standard Oil Co. of Newv Jersey, New York City.
Marion B. Folsom, assistant treasurer Eastman Kodak Co., Rochester, N. Y.
William Green, president American Federation of Labor, Washington, D. C.
George M. Harrison, president Brotherhood of Railway and Steamship Clerks,
Cincinnati, Ohio.
Paul Scharrenberg, secretary-treasurer California State Federation of Labor.
San Francisco, Calif.
Henry Ohl, Jr., president Wisconsin State Federation of Labor. Milwaukee.
Belle Sherwin, former president National League of Women Voters, Washing­
ton, D. C.
Grace Abbott, University of Chicago, and former chief United States Children's
Bureau.
Raymond Moley, editor Today, and former Assistant Secretary of State.
George H. Nordlin, chairman grand trustees, Fraternal Order of Eagles, St.
Paul, Minn.
George Berry, president International Printing Pressmen and Assistants' Union,
Tennessee.
John G. Winant, Governor New Hampshire.
Mary Dewson, National Consumers League, New York City.
Louis J. Taber, master National Grange, Cleveland.
Monsigneur John A. Ryan, director department of social action, National Cath­
olic Welfare Conference, Washington, D. C.
Helen Hall, president National Federation of Settlements and director of the
Henry Street Settlement, New York City.
Joel D. Hunter, general superintendent United Charities of Chicago.
Elizabeth Morrissey, Notre Dame College, Baltimore, Md.
TECHNICAL BOARD

Arthur J. Altmeyer, Second Assistant Secretary of Labor, chairman.

Winfield W. Riefler, executive director Central Statistical Board, ebairman
executive committee.
Otto Beyer, Labor Relations Director, Office of the Federal Coordinator of
Transportation.
Thomas H. Eliot, Associate Solicitor, Department of Labor.
Corrlngton Gill, Assistant Administrator Federal Emergency Relief Adminis­
tration.
Walton Hamilton, chairman Advisory Council, National Recovery Adminis­
tration, chairman medical problems subcommittee.
A. H. Hansen, Chief Economic Analyst, Department of State, chairman unem­
ployment insurance subcommittee.
Alexander Holtzoff, assistant to Attorney General, Department of Justice
Murray Latimer, chairwan Railroad Retirement Board, chairman old-age SW
curity subcommittee.
SI
52 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY

William M. Leiserson, chairman National Mediation Board.

Isador Lubin, Commissioner of Labor Statistics, Department of Labor.
EL A. Millis, board member National Labor Relations Board.
H. B. Myers, Assistant Director, Research and Statistics, Federal Emergency
Relief Administration.
Herman Oliphant, general counsel, Treasury Department.
Stuart Rice, Assistant Director, Bureau of the Census, Department of Corn­
nierce.
H. R. Tolley, Assistant Administrator, Division of Program Planning, Agri­
cultural Adjustment Administration.
Victor N. Vaigren, senior agricultural economist, Department of Agriculture.
Jacob Vinci-, assistant to the Secretary, Treasury Department.
Aubrey Williams, Assistant Administrator, Federal Emergency Relief Admin­
istration, chairman public employment and public assistance subcommnittee.
E. Willard Jensen, Executive Secretary, Business Advisory Council, Department
of Commerce.
Josephine Roche, Assistant Secretary of the Treasury.

ACTUARIAL CONSULTANTS

Prof. James W. Clover, University of Michigan, Ann Arbor, Mich., chairman.

Prof. Henry L. Reitz, University of Iowa, Iowa City, Iowa.
Prof. A. L. Mowbray, University of California, Berkeley, Calif.
M. A. Linton, president Provident Mutual Life Insurance Co., Philadelphia, Pa.
MEDICAL ADVISORY COMMITTEZ

Dr. Harvey Cushing, professor of neurology, Yale University, New Haven, Conn.
Dr. Thomas P~irran, Jr., Newv York State Commnissionmer of Health, New York
City.
Dr. James Deacon Bruce. Ann Arbor, Mich.
Dr. Stuart R. Rob~erts, professor of clinical medicine, Emory University, At­
lanta, Ga.
Dr. Rexivaid Brown, Santa Barbara, Calif.
Dr. James Alexander Miller, professor College of Physicians and Surgeons,
New York City.
Dr. Walter L. Bierring, president American Medical Association, Des Moines,
Iowa.
Dr. Robert B. Greenough, president American College of Surgeons. Boston.
Dr. George M. Piersol, past president American College of Physicians, Phila­
delphiai.
Dr. George CrIle, Cleveland Clinic Hospital, Cleveland.
Dr. J. Shelton Horsley, Richmond, Va.
PUBLIC HEALTH ADVISORY COMMITTEN

Homer Folks, New York State Charities Aid Association, New York City.
Dr. Eugene L. Bishop, Commissioner of Public Health of Nashville, Tena.
Dr. A. L. Chelszey, secretary Minnesota Boa-,d of Health, St. Paul.
Dr. Allen WV.Freeman, dean School of Hy,;iene and Public Health, Johns Hop~­
kins University, Baltimore.
Dr. Clarence Hineks, director National Committee for Mental Hygiene, New
York City.
Dr. Thomas Parran, Jr., Commissioner of Ihealth of New York State, Albany,
N. Y.
Dr. Milton J. Rosenati, Harvard Medical Sc-hool, Cambridge, Mass.
Dr. John J. Sippy, health officer, San Joaquin, Calif.
Katherine Tucker. R. N., director National Organization for Public Health
Nursing, New York City.
C. E. A. Winslow, D. P. H., professor public health, Yale School of Medicine,
New Haven, Conn.
Abel Wolman, chief bureau of sanitary engineering, Maryland Department of
Health, Baltimore.
Dr. Felix J. Underwood, secretary Mississippi Board of Health, Jackson, Miss.
Louis I. Dublin, statistician and vice president, Metropolitan Life Insurance
Co., New York City.
 REPORT OF THE COMMITTEE ON ECONOMIC SECURITY 53
HOSPITAL ADVISORY BOARD
Dr. J. Rollin French, president Western Hospital Association.
Rev. Charles G. Jarrel, president Protestant Hospital Association.
Robert G. Jolly, president American Hospital Association.
Father Alphonse J. Schwitalla, president Catholic Hospital Association.
Dr. Arthur C. Bachineyer, dean Cincinnati General Hospital.
Michael M. Davis, Ph. D., chairman, Council on Community Relations of Ameri­
can Hospital Association.
Dr. Nathanel W. Faxon, director Strong Memorial Hospital of Rochester.
Dr. S. S. Goldwater, commissioner of hospitals, department of health, New
York City.
Dr. Robert C. Buerki, University Hospital of Madison.
Dr. Winford Smith, medical director Johns Hopkins Hospital of Baltimore.
Dr. Fredseric A. Washburn, Boston commissioner of institutions.
Dr. Watson S, Rankrin, director hospital and orphan section, Duke Endow.
ment..
DENTAL ADVISORY COMMITTEE
Dr. Frank 'M. Casto, president American Dental Association of Cleveland.
Dr. J. lien Robinson, president American College of Dentists of Baltimore.
Dr. Le Rtoy M. S. Miner. (lean of Dental School of Harvard.
Dr. Alfred Walker, chairmjan of the Judicial Council of American Dental
Association.
George A. Coleman, D. D. S., Philadelphia.
Dr. 0. W. Brandhorst, St. Louis.
Dr. John T. Banks, New York.
Dr. John T. O'Rourke, Louisville.
Dr. Bissell Palmer, Newv York.
Dr. Herbert E. Phillips, Chicago.
Dr. Roy Green, Sacramento.
ADVISORY COMMITTEE ON PUBLIC EMPLOYMENT AND PUBLIC ASSISTANCE
Miss Dorothy Kahn, director Philadelphia County Relief Board, Philadelphia,
chairman.
Miss Edith Abbott, dean Graduate School of Social Service Administration,
University of Chicago. Chicago.
Miss Gay Shepperson, administrator Georgia Relief Commission, Atlanta.
Frank Bane, director American Public Welfare Association, Chicago.
Miss Elizabeth Wisner, director School of Social Work, Tulane University,
New Orleans.
Father John O'Grady, executive secretary Catholic Conference of Charities,
Washington, D. C.
Dr. Ellen Potter, director of medicine, department of institutions and agencies,
Trenton, N. J.
Prentice Murphy, executive secretary Children's Bureau of Philadelphia.
Jacob Kepecs, Jewvish Home-Finding Society of Chicago.
Linton B. Swift, general director Family Welfare Association of America, New
York City.
Walter West, executive director American Association of Social Workers,
New York City.
Fred H. Hoehler, director of public welfare, Cincinnati.
COMMITTEE ON CHILD WELFARE
Homer Folks, secretary State Charities Aid Association, New York City.
Jacob Kepecs, president Child Welfare League of America, Chicago.
Dr. Grover F. Powers, professor of Pediatrics, Yale Medical School, New
Haveni.
Dr. C'lifford G, Grulee, secretary American Academy of Pediatrics, Chicago.
Dr. Fred L. Adair, department of obstetrics and gynecology, University of
Chicago.
Miss Jane M. Hoey, associate director Welfare Council of New York City.
J. Prentice Murphy, executive secretary the Children's Bureau of Philadelphia.
Dr. T. F. Abercrombie, president conference of State and prcovincial health
authorities, State hoard of health, Atlanta, Ga.
Rev. Bryant McEntegard, New York City.
 SUPPLEM ENT
TO

REPORT TO THE PRESIDENT

OF THE

COMMITTEE ON ECONOMIC SECURITY

55
 TABLES
[Table 1 printed in Report proper]
A. UNEMPLOYMENT RELIEF:
2. Families and persons receiving emergency relief, continental United
States.
3. Cases receiving emergency relief, direct work, special programs.
4. Obligations incurred for emergency relief from all public funds, by source
of funds, January 1033 through November 1934, by months and hy
quarters.
B. UNEMPLOYMENT AND UNEMPLOYMENT COMPENSATION LAWS:
5. Estimate of unemployment in employments which could be covered by
unemployment-insurance plans.
6. States arrayed by average percentage of nonagricultural unemployment
April 1930; 1933 average; and 1930-33 average.
7. Countries in which compulsory unemployment insurance laws have been
enacted and number of workers covered in each.
8. Countries in which voluntary unemployment insurance laws have been
enacted and number of workers covered in each.
9. General provisions of compulsory unemployment insurance Jaws.
10. General provisions of voluntary subsidized unemployment insurance
laws.
C. AGE DISTRIBUTIxON AND OLD-AGEC PENSION LAWS:
11. Number of older persons gainfully occupied by age and occupation for
United States, 1930.
12. Age distribution of United States population by urban and rural for
1920 and 1930.
13. Actual and estimated number of persons aged 65 and over compared
to total population, 1860 to 2000.
14. Operation of old-age pension laws of the United States, 1934.
15. Principal features of the old-age pension laws of the United States.
16. Old-age insurance and pension legislation in foreign countries through
1933.
17. Principal provisions of foreign noncontributory old-age pension laws
through 1933.
D. SECURITY FOE CHILDREN:
18. Estimated number of families and children receiving mothers' aid and
estimated expenditures for this purpose.
19. Funds for State maternal and child health work.
E. MISCELLANEOUS:
20. General economic statistica.
57
58 ECONOMIC SECURITY ACT

TABLE3 2.-Families and persons receiving emergency relief, continental United

States
Resident families and persons receiving relief under the
general relief and special programs Number
_____ __ - ~of tran-
Months Total Percent sients
Faiis Single families Total of total receiving
Faiis persons and sinele persons popula- rle
persons (ion' I

January --------- 3 ----- '13,860,000 (4 ()

February---------------------484, 140, 0 '
March ----------------------- '34,566:0,000 4 ('
Ap-- i4-- - ---- - -- - 4, 7 , 2 )--
may ---
[---------------------- 4,42,52 4434
June---------- ----------- 3,789, 026 (4 ()4)() (
July ----------------- --------- 3,451, 874 3455, 000 3, 90, 874 '15, 282, 000 12 (
Augst----
------------- 3351, 810 ' 412.000 3, 783, 8l0 ' 15.077, 000 12
September---------- ---------- 2. 984, 975 ' 403, 000 3. 387.975 U 13, 338, 000II
October----------------------- 3,010,5318 '436,.000 3. 446,518 a113,818,000 11 (
November--------------------- 3,3651,114 481.315 3,826,429 11,080,48 12 (
December_--------- ---------- 2,631, 020 438, 431 3, 069, 431 11,804. 860 10
H134
January----------------------- 2, 488. 274 466, 489 2. 942, 743 11,088,186 9 (')
February---------------------- 2,599.9785 832,038 3.132,011 11,827,418 9 128,87h
March------------------------ 3,070,851 583,138 3.633.993 13,494,282 11 145,119
April ------------------------- 3,847, 235 590,007 4. 437, 242 18,840,389 14 184, 244
May-------------------------- 3.815,920 817, 735 4.433,881 17.228, 458 14 174, 138
June-------------------------- 3,717,971 869. 502 4. 317.473 18,833, 294 14 187,282
July ------------------------- 3,867, 047 642. 382 4,409.409 17, 301. 734 14 195,051
August------------------------ 4.059,605 669,877 4.8620.482 18. 187, 193 11 206. 173
September -------------------- 4,066,723 6156.215 4. 712.940 18, 410, 334 11 221, 734
October---------------------- '34, 100,6861 720. 813 ' 4,827,6534 s 18,450, 167 15 2315,758
November'6------------------- 4,225,000 1710, 000 4. 971,000 18,900.000 1 1 208, 000

1Based on 1930 Census of Population.

'Middle of month figures, excluding local homeless which are included under general relief program.
'Partially estimated.
4Not available.
'Partially estimated to cover the rural rehabilitation program on which reports are not yet complete.
IPreliminary.
Source: Division of Research, Statistics, and Finance, Federal Emergency Relief Administration.

TABLE: 3.-Cases' receiving emergency relief-direct, work, special programs

General relief
194Grand -____- ___ Special
194total pro-
Total Work pro- Direct grams'I
gralns relief only

April ------------------------------------ 4,437,242 4,437,242 1,178,818 8,280,424 (4)

May ------------------------------------ 4,433,861 4, 320,187 1,341,214 2,978,973 113. 474
June------------------------- ----------- 4,317,473 4, 237, 425 1,477,753 2,759. 672 80.048
July------------------------------------- 4,409,409 4, 368, 195 1,723, 295 2,0644. 900 41, 214
August ---------------------------------- 4,629, 482 4,582.434 1,922,029 2,880,405 47,046
September ------------------------------- 4,752, 940 4, 819, 498 1,960, 728 2, 6818768 133, 444
October --------------------------------- 4,827, 534 4,654,402 1,998, 167 2,6566.231 173, 137
November'4------------------------------ 4,971,000 4, 781, 000 2,150. 000 2,8635,000 190,000

I Cases Include each family or single person on relief, not counting transient single persons.
I Rural rehabilitation program, emergency education program, student aid; excludes transients.
' Cases aided under special programs in April were Included In the general relief program.
'Preliminary.
Source: Division of Research, Statistics, and Finance, Federal Emergency Relief Administration,
 ECONOMIC SECURITY ACT 59
TABLE 4.-Obligations incurredfor emergency relief from all public funds by source
of funds, January 1983 through November 1934, by months and by quarters'I

Obligations incurred for emergency relief

Federal funds State funds Local funds

Total
Amount Per- Amount Pe- Amount Pr
cent cent cent

1933
January ------------- $60.89-7160. EA $31,176,001.46 51.3 $8.898,268.71 14.6 $20.753,970.69 34.1
February------------- 67.376,423.321 39,850,236.88 69. 1 5.921,376.42 8.8 21,603,611.02 32.1
March--------------- 81,205,631.611 61,355,220.07 63.2 6,212,394. 33 6.4 24, 638. 017.21 30.4
First quarter - 209, 408, 216.79 122.380,457.41 68.4 20,032.059.46 9.6 66,995, 698. 92 32.0

April--------------73. 010,800. 68 45.373.968.80 62.1 8,182,877.70 11. 2 19,453,954.18 26. 7

May----------70,806,338.08 48,803.456.80 68.9 6,017, 248. 11 7.1 16.9856.633. 17 24.0
June---------- -- 66, 339, 206. 68 42, 523, 714.87 64. 1 8,038.872. 89 12. 1 15, 776, 618.92 23. 8

Second quar­
ter----------- 210,1568,345.44 136, 701, 140.47 66.0 21,238.998. 70 10.1 62.218.206. 27 24.9

July -------- --------- 60,166.873.87 37, 482,328.17 62.3 7,676,654.71 12.8 15, 096,990.99 23.1
August-----:---------61,470,496.37 39, 781.831.27 64.7 8,726, 266.4 14.2 12,962,398.70 21. 1
September ------------ 59. 346,368. 14 368.289. 168. 33 61. 1 11,093.954.69 18.7 11.963,195.12 20.2

Third quarter- 180.972.708.38 113.563,347.77 62. 8 27,396,775.80 16. I 40,022,684.81 22.1

October -------------- 64, 888.913. 42 40, 415,363. 18 62. 3 10, 186, 795. 80 15.7 14, 286. 764. 77 22. 0
November ------------ 70. 810,5614. 27 39, 796, 429. 13 5662 18. 633, 708.' 17 26. 3 12, 380, 318.971 17.6
December ------------ 66. 526, 330.37 27,755.055.43 49. 1 18, 768,833.14 33.2 10,002Z 441.680 17. 7

Fourth quar­
ter ----------- 192, 225, 768.08 107, 966,837.71 66. 2 47,589,394.81 24. 7 36.669, 625. 64 19. 1

Total, 1933.-- 792.763,027.67 480,601,783.36 60. 6 116,257,228.77 14. 7 195.904. 016. 54 24. 7

193476
January -------------- 83,880,834.0 29,065,76. 51 54.0 16, 124, 460.09 29. 9 8,690. 6.37.50 16. 1
February ------------- 67, 668,219.60 26,462.868. 11 46.90 21,832, 729.656 37.89 9, 372, 624. 93 16. 2
March--------------- 60, 794, 802.92 32.6522, 396.84 46.6 25,616,747.44 36.7 11.666,659.64 16. 7

First quarter.- 181,343,849.53 68, 060. 990.4 48.4&5 63.672.937.09 36.1 29, 719. 922._071 16.4

April --- ------ 113,134,266.74 82, 299,6651. 45 72.7 17.642,023. 89 16.6 13, 192,711.40 11. 7
Way'.---------- 129, 222. 770. 62 06, 741,143. 12 74.9 12.647. 639. 02 9.8 16,633,686.48 16.3
June 2 --------- 12., 198, 649. 88 92. 084.137. 06 73. 6 11. 777. 402. 31 9.4 21, 337, 110.61 17. 0

Second quar­
ter I------ 367, 563,707. 24 271, 124,833. 63 73.8 42. 067.066. 22 11.4 54.363.8908. 39 14.8

July 3 --------- 130,963,216.11I 92. 146. 288. 68 72. 6 13.061,941. 23 10.0 22, 744,9856.20 17. 4
August I -------- 149, 424,666.07 113,308,671.80 75. 8 12. 226,882. 75 8.2 23,6889, 100.52 16. 0
September'J----------143,227,846.44 108,6650,1868.27 75.8 11,408,614.12 8. 0 23, 262,046.685 16. 2

Third - - -quar­
---- -- -
ter$ 423.605,616. 62 317, 014,946. 76 74.8 368.693.438. 10 8.7 69,896. 131.77 16.8
October'I------------166,747,867.63 121,949,841. 06 77.8 13,950,6560. 23 8.9 20,847,408.40 13.3
November I ------ 172,750,000.00 139,430,006. 09 80.7 10. 670,000.6 6.2 22,650,000.06 13.

Total, 1934 3--- 1,302. 003,9041. 02 937,669,711.84 72.0 10.66.5,000.66 12.8 197,477.328. 63 16. 2

Total. 2317
months3---- 2,094.766.068. 69 1,418. 171. 495. 20 67. 7 283, 213. 229. 32 13.6 393,681,344.17 18.8

I Includes obligations incurred for relief extended under the general relief program under all special
programs, and for administration; beginning April 1934 these figures also include pur'asses of materials,
supplies, and equipment, rentals of equipment (such as team and truck hire). earnings of nonrelief persons
employed, and other expenseincident to the work program. Does not include about $990,000,000 expended
for the C. W. A., of which $840,000,000 was derived from Federal funds and $130,000,006 from State and local
funds.
' Break-down partially estimated.
' Preliminary.
Bouroe: Division of Research, Statistics, and Finance, Federal Emergency Relief Administration. Jan.
1. 195. Table based on reports from State and local relief administrations.
60 ECONOMIC SECURITY ACT

TABLE 5.-Eatimate of unemployment in employmenta which are customarily

covered by unemploymeni-in~surance plansO
Estimated Estimated
percent of percent of
Year: unemnployment Year-Continued. uiemiploymenti
1922 ---------------------- 13.1 1928---------------------- 8. 5
1923 ---------------------- 7.'3 1929---------------------- 6.1
1924 ---------------------- 9. 4 1930---------------------- 15.3
1925 ---------------------- 7. 8 1931---------------------- 26.6
1926---------------------- 7. 4 1932 --------------------- 39.0
1927---------------------- 8. 3 1933--------------------- 39.2
Source: Estimates of the Committee on Econom,'c Security. It should be noted that these unemploy­
ment rates are indicative only of the unemployment occurring in the group of gainful workers which arm
customarily covered by unemploymnent-insurance plans, and that they do not represent the unlemploy­
ment for the entire working population. These rates are higher than those for ali gainful workers, because
the incidence of unemployment borne by the gpoup covered is grester than for the working population
as a Wb~,le.
 TABLE 6.-States arrayed by average percentage of nonagriculturalunemployment-April 1930; 1933 average; and 1930-33 average

April 1930 1933 average 1930-33 average

Percent of Percent of rertcent of

gainful Ratio to gasinful Ratio to gainful Ratio to
state workers average of State workers average of State workers average of
unem- ali States u~ene all States unem- anl States
ployed ployed ployed

Percnid PecetCO Percent

AUl States-------------------- 8.56 100.0 All States------------------ 33. 2 100.0 All Stales------------------ 26.8 100. 0
1. Michigan ---------------------- 13.9 183. 5 Michigan ----------------------- 48.9 138. 3 MichfIgan ----------------------- 34. 3 132. 9 0
2. Rhode Island------------------- 11. 2 131.8 Pennsylvania-------------------- 40. 2 121.1 Rhode Island-------------------- 29. 6 114.7 0
8. Montana ---------------------- 10. 7 125. 9 Arkansas------------------------ 39.2 118.1 New Jersey --------------------- 28. 8 111.8 t4
4. Illinois------------------------ 10.3 121. 2 New Jersey --------------------- 38.8 118.9 Montana------------------------ 28.4 110.1 0
5. Oregon------------------------ 10.1 118. 8 Arizona------------------------- 38. 118.&3 Pennsylvania-------------------- 28. 3 109. 7 9
6. Nevada------------------------ 9.8 115. 3 New Mexico -------------------- 38. 3 115. 4 Illinois-------------------------- 28.0 los. s 0
7. Ohio -------------------------- 9.8a 111. 8 New York ---------------------- 38.1 114.8 New York ---------------------- 27.8 107. 9
8. Messachusetts------------------- 9.4 110.8a Rhode Island-------------------- 36. 6 110.2 Nevada --------------------- --- 27. 8 107. 9
9.Pennsylvania------------------- 9. 0 105. 9 Florida ------------------------- 38.8 110.2 Arizona------------------------- 27.7 107. 4 0
10. Colorado----------------------- 8.9 104.7 Montana------------------------ 38.4 109.86 Florida ------------------------- 27.1 1os. 0 C
11. New Jersey--------------------- 8.9 304.7 IllInois-------------------------- 38.7 107.58 Massachusetts------------------- 27. 0 104. 7
32. California---------------------- 8.8 103. 5 Nevada------------------------- 38.4 108.6 Ohio --------------------------- 28. 9 104.3
13. New York --------------------- 8. 7 102. 4 Colorado------------------------ 35.3 108.3 Indiana ------------------------- 38.86 lo0. 1
14. Indiana ------------------------ 8.8a 101. 2 Massachusetts------------------- 34. 8 104.8 Connecticut --------------------- 28.4 102. 3
15. Washington-------------------- 8.8a 101.2 VWtah-------------------------- 34.3 103.3 New Mexico-------------------- 28. 2 101.8
18. Utah -------------------------- 8&.5 100.0 Wyoming----------------------- 33.9 102.1 Utah ---------------------- 28.7 99.6
17. Florida ------------------------ 8.85 100. 0 Indiana------------------------- 33.4 100.86 Arkansas------------------------ 256. 99.2
18. Oklahoma---------------------- 8.4 98.8 Ohio --------------------------- 32. 2 97. 0 Colorado------------------------ 25. 1 97.3
19. Maine ------------------------- 8.2 98. 5 Connecticut -- ------------ 31.7 98. 5 Washington--------------------- 24. 4 94. 8
2.Mneoa----------8.2 98.5 Texas---------- ---------- 31.60 96.2 Wyoming----------------------- 2. 2 93.8
21. Vermont----------------------- 8.0 94.1 Missouri------------------- 3. 94. 9 Mlaeouri------------------------ 24. 2 93.89
22. North Carolina..---------- 7. 9 92.9 Iowa----------------------- 31.:0 03.4 Oklahoma -- ------------- 24.2 93.8
23. New Hampshie---------7. 9 92.9 :---
Vermont--------- -:-:-------- 30.,9 93. 1 Louisiana----------------------- 2. 1 93. 4
24. Kentucky--------------7.8 91. 8 Washington--- ---- ------------ 30. 7 92.8 Vermont------------------------ 24. 1 93.4
25. Connecticut ----- ------ 7.8 91.8 Louisana .------- ------- 30. 6 92. 2 CalIfornia ------------------ - 24.0 93.0
 TABi~u 6.-&8ates array~ed byj average percentage of nonagriculturalunemplotjment.-April 1980; 1988 average; and 1980-88 average-Contd.

April 1930 1933 average 1930-33 average

Percent of Percent of Percent of

gainful Ratio to gainful Ratio to gainful Ratio to
state workers average of State workers average of Sntat workers average Of
Unem- all States unem- all States uneni- all States
ployed ployed played

Prreeni Percenii Percent

28. Wisconsin -------- . 7.8 91.8 Minnesota. ---.- --.------ 30.3 91.8S Texas ------- ------------------- 23. 9 9186
27. MissourLi... 7.7 90.8 Nebraska--------------------------30.2 91.0 Wisconsin----------------------- 23.8 92.2 tN
29. oidlaho - - 77 90.8 West Vigna--------- - 29.4 88.8 Minnesota------- --------------- 23.4 90.7 0
-----------
29 dh 7.86 89.4 Maryland - -- -------- 29.4 88.8 Maryland------------ ---- 23.4 90.7
30. WetVrina - - 7. 4 87.1 California ---------------- 292 88.0 West Virginia ..---------- 23.2 89.9 ~
81. New Mexioo--- --.. 7.4 87.1 Oklahoma.--.. -----------------. 29.2 88. 0 Alabama------------------------ 23.2 89.9
32. Arizona -----­ 3.4 87.1 Alabama --- --- ------------ 29.1 87.7 Maine------ ------------------- 21.8 84.5 ­
33. Wyoming-.. 7.1 83.5 Wisconsin.--------.---- - 28.8 88.7 Iowa------ --------------------- 21.8 84.5 0
84. Texas ----- 8.7 78.8 Idaho - -------- -------- 2885 88.8 Idaho--------------------------- 21.8 84.5
85&rase........--------. 78.8 North Dakota..----.-.------------- 27.3 82. 2 New Hampshire------------------ 21.8 8.
88. Kansms------------------------ 8. 2 72. 9 Kansas - -------- ------- 289 81. 0 Oregon-------------------------- 21.7 B1.1
87. North Dakota ------------------ 8.1I 71.8 Virginia------------------------- 25.8 77.1 Nebraska ----------------------- 21.8 83.3 C
38. Virginia -- ----- &9
5.-- 69.4 Mississippi ---- --------- - 21.1 78.8 North Carolina------------------ 21.3 82.80
89. Nebraska~.-------------------- 8.9 894 Kentucky --------------------- 22.7 88.4 Virginia------------------------- 21.1 81.8
40 oge....----------89 69.4 South Dakote.------------------- 22. 7 81.4 Kansas --- ---------------------- 21.0 81.4
41. Maryland---------------------- 5.8 68.2 Tennessee -- -------------------- 22.8 88.1I Kentucky-----------------------320.8 80.86
42. Alabama..------------------- 86.8 81.9 Oregon----------------------- 21.3 84.2 Tennessee----------------------- 20.4 79.1
43.
44.
Iowa---------------- ---------
Tennessee.-------------------
85.4
--- 6.3
83. 5
82.4
New Hampshire-----------------
District of Columbia--------------
21.3
21.0
84.2
83.3
Mississippi ----------------------
North Dakota -------------------
19.4
18.9
78.2 ~0
73.3
45. South Carolina------------------ 8. 2 81.2 Maine -------------------------- 20.3 81.1 District of Columbia-------------- 18.3 70.9
48. Delaware------------------ --- 5S.2 81. 2 North Carolina.....----------------- 18. 4 85.4 Delaware------------------------ 18. 3 70.9
47. District of Columbia .--. to9 57.8 Delaware------------------------ 18.7 50.3 South Dakota--------------17. 8 7.8
48. Mississippi--------------------- 4.8 54.1 South Carolina ----------- 12.9 38.9 South Caoia..--------17.2 66.7
49. South Dakota------------------- 3.9 45. 9I Georgia ------------------------- 12.6 38.0 Georgia------------------------- 17.0 65.9

Source: Estimates derived from population and employment data reported by the U. S. Bureau of the Census, the U. S. Bureau of Agricultural Economics, and the U. S.
13ureau OfXAbor Statistics.
 ECONOMIC SECURITY ACT 63
TABLB 7.-Countries in which compulsory unemployment-insurance laws have been
enacted and number of workers covered in each

Country I Date or law INumber

Insured I

Australia (Queensland) ------------------------------------------------ Oct. 18,1922 175, 000

Austria -------------------------------------------------------------- Mar. 24. 1920 969, 000
Bulgaria------------------------------------------------------------- Apr. 12, 1925 280,000
Germany ------------------------------------------------------------ July 16, 1927 4 17,920, 000
Great Britain and Northern Ireland ------------------------------------- Dec. 16,1911 12,960,000
Irish Free State------------------------------------------------------- Aug. 9, 1920 359. 000
Italy ---------------------------------------------------------------- Oct. 19, 1919 4,000, 000
Poland--------------------------------------------------------------- July 58, 1924 954, 000
Switzerland (13 cantons) ------------------------------------------------- (5) *325, 00
United States (Wisconsin) --------------------------------------------- Jan. 29, 1932 330, 000
Total number insured------------------------------------------- --------------- 518, 272, 000

I A compulsory law was passed In Russia In 1922, but benefit payments were suspended III 1930.
a These are the dates upon which the laws were enacted, not the dates upon which they went Into effect.
I These are the most recent figures available.
4 Tis figure represents the number covered previous to the heginning of the depression in 1929. The
ofcial figure is much smaller (12,603,000 at end of August 1933); the difference is due not to any limitation
of coverage but to the fact that those unemployed workers who had exhausted their right to Insurance bene­
fits and had thus come within the scope of the comnmual relief were not included in the figures for the
members covered by unemployment insurance.
*The first of the cantonal measures was passed In 1925.
*This figure includes persons compulsorily insured In certain communes in cantons having voluntary
insurance.
Source: Compiled hy the Committee on Economic Security.

TABLE 8.-Countries in which voluntary unemployment insurance laws have been

enacted and number of workers covered in each

Country Date of law INumber

insured I

Belgium ------------------------------------------------------------- Dec. 30,1920 1,038.000

Czechoslovakia ------------------------------------------------------- July 19.192t3 1.500. 000
Denmark ------------------------------------------------------------ Apr. 9,1907 337,000
Finland-------------------------------------------------------------- Nov. 2, 1917 15,000
France--------------------------------------------------------------- Sept. 9, 1005 192, 000
Netherlands ---------------------------------------------------------- Dec. 2, 1916 502,000
Norway-------------------------------------------------------------- Aug. 6,1915 47.000
Spain---------------------------------------------------------------- May 25. 1931 ' 50,000
Sweden-------------------------------------------------------------- Jan. 1, 1935 (8)
Switzerland (11 cantons) ----------------------------------------------- Oct. 17,1924' 5195,
000
Total number insured ------------------------------------------- ---------------13,876,000

I These are the dates for the enactment of the national laws, not the dates upon which they took effect.
IThese are the most recent figures available.
IThis act camne into effect on Apr. 1, 1925.
' The number of persons belonging to funds which may be subject to the insurance law is 80,000. It is
not definitely known whether all these persons come under the law but it Is probable that the majority of
them do.
a It is estimated that 23 unions with 320,000 members have funds which may be used for the Insurance
provided in the law. The law became effective Jan. 1, 1936. It Is likely that 320,000 can be taken as a
rough estimate of the number who will come under the law in Its early stages.
' 7 of these cantons specify that communes may enforce compulsory insurance within their borders; the
population of communes that have compulsory insurance is given in table 1.
IThis is the date of the national measure. The first of the cantonal acts was passed in 1925.
Source: Compiled by the Committee on Economic Security.
 TABLE 9.--General provision., of cornpulsoryi unemploy~ment insurance laws

Country and year of Regular weekly contributions Qualifyi~ng period Waiting period Amount ofbnei Normal duraton of
original law I (contributions) (days) benefits

Australla(Queensland),1922 Workers,employers, Stateeseah d--- 28 weeks ---------- I4L--------------- Varies with locality, marital status, I3 weeks.
and number of dependent..
Austria, 1920 --------------- One-ballfworkers, one-half employers, 20 weeks --------- 8---------------- Varies with wage classes, marital 12to 20 weeks.
asnroentage of basic wage classes. status and number of dependents.
Bulgaria, 1925------------...Worferssnlyrttec ev.8 ek n2er ----------- 186 lvev 3aiy for bead of family; 1lOvev 12 weeks.
all others.
Germany, 1927-------------- Workers, employes. each 34 percent ---- do ------------ Varies, 3to 14with Varies with wage classes, locality, and 14 weeks (means test ro­
of basic wage classes, number of de- number of dependents. quired after 8 weeks).
pendents.
Greet Britain, 1911---------- Workers, employers, Btat., each one- 30 weeks in 2years- 8---------------- Varies with age, sex, and number of 28 weeks. o
third, as lat rate varying with age dependents. o
and sex.
Irish Free State, 1921
----- Workers and employers contribute 12 weeks --------- 8---------------- ----do_ ---- 1---day's benefit for each o
varying amounts; State two- weekly contribution.
sevenths of aggregate.
Italy, 1919----------------- One-half workers, one-half employers,
as percentage of basic wage classes.
48 weeks In 2years. 7---------------- Varies with wage clse ~90 to 120 days.
Poland, 1924 3 ---------- Wage *ernser 4 percent of wages; 28 weeks---------- 10----------Varies with marital status and num, 13 weeks. c
employers, 14 percent 3 State 1 per- number of dependents.
cent.
Switzerland (13cantons)----Varies witb tbe type of insurance 180-day mInimum. 3 minimum Maximum benefit 80 percent wages, 90-day maximum. C
fund, occupation, risks involved, pl1us 10 percent for members with
and laws of Canton. dependents.

IA compulsory law was passed In Russia In 1922, but benefits were suspended In 1930. owing to an absence of unemployment.
Poland also has a system of unemployment insurance for salaried workers to which only employers and employees contribute.o
Source: Compiled mainly from the MontlyI Laber Review, August and September 1934, "Operation of Unemployment Insurance Systems in the UnIted States and Foreign
Countries."
 TABLE I0.-General provisiona of voluntary subsidized unemployjment insurance laws

Country and year of

original law
ISubsidies
Ibnft
Qualifying period Waiting period Maximum amount of Normal duration of benefits

Belgium, 1920 ---------- State pays two-thirds of contrhirutions 1 year-------------------1I day each month plus 3 Thrte-fourths usual wages- 30days each 6months.
by members. dlays each 6 months.
Czeohoslovakia, 1921.--- State pays 2 to 3 times union benefits.. Varies with fund; 3-month 7 days------------------- Two-thirds last wage-....26 weeks.
tiIrnurn
Denmark, 1917---------- State, 15 to 90 percent contributions; 12moniths --------------- 6-day minimum; 16 maxi- Two-thirds average earn- Varies; 70 to 120 days.
local governments pay one-third of mum. Varieswith fund. ings.
State subsidy.
__6-day minimum; 18 mnaxi- Two-thirds average wage..-
Finland, 1917 ----------- State, one-third to two-thirds of bene- 6 months -------------- 120 days.
fits paid by funds, mnum; varies.
France, 1905 ------------ State,60to90percen~tofbeneflts-.........--do ------------------ Varies with funds------One-half normal wages--- 180 days.
Netherlands, 1916l-----Federal. one-half workers contrilm- Varies; 26 weeks in geno Varies; 6 days In general.-- 70 percent average daily Varies; 36 to 90 days. o
tions; local, one-half also. eral. wage.
Norway, 1915 ----------- State one-half and more of benetits 26 weeks ---------------- Varies with fund; 3 to 14 One-hall daily earnings----. 13weeks. V
paid; local governments pay two- days.
thirds of State subsidy.
Spain, 1931 ------------- State pays varying percentage of heris- 6 months ------ ----- 6 days-------------- Three-fifths normal wages.' 60 days.
fits.
Sweden, 1934 -----------State pays percentage of benefits.----52 weeks In 2 years- minimum; 3-month Four-fifths usual wages.---
6-----day 9o-day minimum; 120-day us
mnaxinmnum, maximumt.
Switzerland, 1924 ----- Federal subsidy, 38 to 43 percent of 180-day rminimium------3-day minimum---------.Three-fifths normal wages. 90-day maximum. 0
benefits plus cantonal and corm­
munal subsidies.

I'Sweden's law became effective Jan. 1, 1935.

Source: Compiled mainly from the Mfonthly Labor Review, August anti September 1934, "Operation of Unemployment Insurance Systems in the United States and Foreign 01'
Countries." o
66 ECONOMIC SECURITY ACT

TABLE 11.-Number of older persons gainfully occupied by age and occupation for.
United States, 1980'1

45and S0 and Me nd 60 and e65and 70 and 75 and

over over over over over over over

Total population ---------- 28,048,786 21.006,607 15,030, 703 10,383,026 6. 633,805 3,8963. 200 1,913,198
Total gainfully occupied.---- 14,626, 620 10,350,550 8, 795, 459 4,16.5, 395 2. 204.967 977. 925 335, 023
Agriculture---------------- 3.891.100 2,979.047 2,115,609 1,407,129 829, 825 417, 734 159,809
Forestry and fishing---------- 84. 013 58, 250 36.805 21,827 11,100 4, 678 1,493
Extraction of minerals ---- 286, 039 181, 594 104.957 64, 796 24. 553 8,572 2, 347
Manufacturing and me­
chanical industries----- 4,165,502 2,837. 582 1,794.848 1,047,104 518, 525 205.130 61, 048
Transportation and com­
munication---------------994.998 85, 832 400,231 222,808 100. 297 33,141 9,073
Trade -------------------- 1,868.026 1,307, 044 831, 557 488,493 247. 726 105,367 33, 618
Public service -------------- 3851,075 270, 775 192,679 126,097 69,441 29. 701 8,891
Professional service---------- 852,491 596.732 380,186 223,031 113, 284 81,190 18,496
Domestic and personal serv­
too ..--------------- 1,868.011 1,107.36 72,92 43768 232,989 99,963 33,500
Clerical occupatlone--------- 646,38 I 52,3291 215.23.5 12,421 67,2271 22.449 6,750

I Less unknown.
Source: Fifteenth Censu of the U. B., 1930, vol. II, Population.table S. p. 587, and vol. IV, Occupation.
table 21. p. 42,
 TABLIE 12.-Age disatribution of United States population by urban and ruralfor 19f0 and 1930

Total population Urban population Rural population

192D 1I30 192 1930 1920 1930

Age group__ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ __ _ _ _ _ _ _ _

Accumu- Accumu- Accumu-

Number Number Iated per- Number Number lated per- Number Number lated per­
centage' centagel o entagelI

Under 5 -------------------------------------------------- 1. 673, 230 11,444, 390------------ 5, 275, 751 56,26,360------------- 6, 297, 479 5,818,030 .----­
II1t09------------------------------------------------------ 11,398,075 12.607.609 90.8 5,050,276 6,211, 141 91.7 6,347,799 6,396,468 69.1 M
l0 to 14 ---------------------------------------------------- 10.641.137 1Z 004. 877 80.3 4,684,312 5,949,693 82.7 5,976.825 6,0655.184 77.3 0
151to19----------------------------------------------------- 9,430,558 11.552.115 70.5 4,445,963 6,015,411 74.1 4,984,593 6,536,704 66.0 0
20to 24----------------------------------------------------- 9,277,021 10,870,378 61.1 5.102,099 6,420,308 65.4 4,174.922 4,450,070 65.7 t
25 to29----------------------------------------------------- 9.086,491 9,833,608 52.2 5,319,058 6,171.951 68.1 3,767.433 3,661,657 47.4 0
30 to 34----------------------------------------------------- 8,071. 193 9,120,421 44. 2 4.726, 556 5, 773, 478 47. 1 3, 344, 637 3,346,943 40. 6
35 to 39----------------------------------------------------- 7.775,281 9,208,645 36.8 4,453,437 5.773.764 18.8 3,321,844 3,434.881 34. 4
401to44----------------------------------------------------- 6,345,557 7,990,195 29.3 3, 602,119 4,932,386 30.4 2,743.438 3,057,609 28. 0
45 to 49----------------------------------------------------- 5,763,620 7,042,279 22. 8 3,190,639 4,2T22,829 23.2 2,572,981 2,819,450 22.4 0
60103 4----------------------------------------------------- 4, 734, 873 5,975.804 17.1 2,613,070 3,491,25.7 17.1 2.121,803 2,484,547 17.1 M
55 to 59----------------------------------------------------- 3,549, 124 4,645, 677 12.2 1,895.847 2, 656, 418 12. 0 1,653, 277 1.985, 261 12. 5 0
60to 64-----------------------------------------------------2. 982,548 3,751,221 8.5 1, 528,090 2,120,260 8. 2 1,454,458 1,630,961 8.8 CI
65 to 69-----------------------------------------------------2. 068.475 2,770,805 5.4 1,000.986 1,527,724 5.1 1,067,489 1,242,881 5.8 W
701to74----------------------------------------------------- 1,395.036 1,950,004 3.1 660,731 1,031,232 2.9 731.305 918,772 3.5 ­
7510o79 ----------------------------------------------------- 856,560 1,106,390 1. 6 398,637 563,217 1.4 467,92-3 543, 173 L.8
80 to84------------------------------------------------------ 402.779 534,876 .7 185,455 267.715 .8 217.324 266.961 .8
851to89------------------------------------------------------ 156.539 205.469 .2 3'69, 012 102. 133 .2 '83.527 103,336 .3
90 to 94------------------------------------------------------ 39.980 51,864 .1 ' 17.626 25, 147 ('5 ' 22,354 26,517 .1
95 to 99 ------------------------------------------------------ 9,579 11,033 (3) ' 4,223 5,007 (3) ' 5,356 6.026 ('1
100 and over-------------------------------------------------- 4.267 3,984 (') ' 1,881 1,360 (') ' 2,386 2,604 (I)
Unknown--------------------------------------------------- 148, 699 94,022 .1 98,535 66, 036 .1 49, 864 27, 993.
Total population -------------------------------------- 105,710,620 12.7,4 0. 4.394,603 689483 100 8,0,1 38023 100.0

1 Accumulated percentage based on all over first age mentioned in each age group.
' Estimated.
' Less than one-tenth of 1 per cent.
Source: Fifteenth Census of the U. S., 1930, vol. IL Populetien, tables 7 and 18, pp. 178. 587-89.
68 ECONOMIC SECURITY ACT

TABLE 13.-Actual and estimated number of persons aged 65 and over compared to
total population, 1860 to 2000
Yer Number Tota pop- Percent Number Toa o-Percent
Yea aed65
ultin ge 6 Yar aged 6 Toapp-aged 6
an oe adovrand over utin and over

1860 ------------ 849, 000 31, 443, 000 2. 7 1940 ----------- 8.311. 000 132, 000, 000 6. 3
1870------------ 1,154,000 38.558,000 3.0 1950 ----------- 10.863,000 141.000,000 7. 7
1880------------ 1,723,000 50,156,000 3.4 1960 ----------- 13, 690. 000 148.000,000 9.3
1890------------ 2, 424, 000 62,622,000 3. 9 1970------15. 066,000 149, 000,000 10. 1
1900 ----------- 3,089,000 75,995,000 4.1 11980----------:17.001,000 150,000,000 11.3
1910 ----------- 3,958,000 91,972,000
1920 ----------- 4,940,000 105,711,000
4. 3 10-----9.
4. 7 200-----19,338.000
102.000 ~151. 000, 000 12.6
151.000. 000 12.7
1930 ----------- 6, 834, 000 122, 775, 000 5.4

Source: Data for years 1860 to 1930 from the U. S. Censuses. Estimates for subsequent years hy the
actuarial stall of the Committee on EconomnicSecurity. These forecasts are made on tbeassumptionof a
net immigration of 100,000 annually in years 19135-39, and 200,000 annually In 1940 and thereafter.
TABLE 14.-Operation of old-age pension laws of the United States, 1934

Percent­
age of
Number Number pension- Avea Yal
state Type of law of pen- of eligi- ers to pensaoe I Yearl
sioners' bleiage'I number pnin
of eligi­
ble age

Percent
Alaska--------------------------- Mandatory- '446 3,437 11.1 820.82 395.706
Arizona-------------------------- --- do,------.. 81.974
A 9.118 21.6 9.01 2D00.92
California------------------------ --- :-do --- 19.I):300 2190, 379 9.2 21.16a 3,502.000
Colorado------------------------ -----do--.,,.., 8,705 61,787 14.1 8.59 172,481
Delaware ----------------------- ----- do----- I1,610 16.678 9.7 9.79 188.740
Hawaii------------------------- -Optional -- (8) (6) (6) (g) (6)
Idaho -------------------------- Mandatory- 1,275 22,310 6.7 8.85 114,521
Indiana------------------------------- do ---- 123.418 138,428 16.9 '8. 13 ' 1,254,169
Iowa--------------------------------- do - '---
43,000 184. 239 1.6a '13.80 '475,500
Kenitucky ------------------------ 0Otional ---- ~) " (6
Maine----------------------------Mandatory.
Maryland ------------------------ Optional---
~-- "2141
SII
92,972
SIi
.2
(n)3
29.90
(0'I)
50.217
Massachusetts-------------------- Mandatory- "s20,0OM 186. 59 12.8 28. 35 5,411. 723
Michigan------------------------ ---- do- "---
s2,660 148.853 1. 8 "t9.59 "306.096
Minnesota ----------------------- Optional ---- 2,655 94,401 2.8 13.20 420. 536
Montana ------------------ ----- -----do----- 1.781 14,377 12.4 7.28 155,525
Nebraska--------------- --------- Mandatory (1") (o) C"1) C"1) ("4)
Nevada--------------------------O9ptional--- 23 4,814 .6 15.0 3,320
New Hampshire ------------------ Mandatory. '1.423 25,714 6.5 "519.06 1"298.722
New Jersey ----------- ---------- -----do----- "10,860 110,Z594 9. 4 12.72 1.375.693
New York---------------------- -----do-----51,228 373,878 13. 7 22.16 13,592,080
North Dakota ------------------- -----do----- "1) (I') ('8) (1') ('6)
Ohie --------------------------------- do.....,.. "s24,000 414.836 5.8 ' 13.99 "33, 000,000
Pregnnsylvania ------------------- -----do...-----7 ?f (5 17
Oregnnyvna---------------------- -----do (?
Utah--------------------------------- do,,.- 930 22,665 4.1 8.56 95,5mg
Washiungton,,--------------- ----- -----do-- '--12,239 101,~ 2. 2 (S) (6)
West Virginia--------------------- Optional-- ('6) (C) C"6) ("6) ("6)
W isconsin ----------------------- -----do----- 1,969 112,112 1.8 16.75 395,707
Wyoming ------------------------ Mandatory. 643 8,707 7.4 10.79 83,231
Total --------------------- -------------- 180,003-------------- ---------- 31, 192,492

' Where no special reference Is given, the figures are as of Dec. 31, 1933.
' 1930 Census figures.
'Where no special reference is given, the figures represent actuai cost for the year 193.
'As of December 1934.
'As of Oct. 1, 1934.
'No Information available or not computed.
'As of August 1934.
'Appropriation for 1934.
'Estimated from expenditures of April through November 1934, $317,000,
"0Nopensions being paid.
"INot yet In effect.
"1As of November 1934.
"1Estimated from monthly figures.

"AI nseT b onis n nomto available for Plate,

8or~Data collected by the Oommlttee on Economic Security.

 TABLE 15.-Pr-incipalfeat sres of the old-age pension laws.of the United States

Administration Allocation of expenses Qualifications for reciplie~ta

Dae Dt t aueo fRdDlsqualific Oerro Maximum Pro fpy

en-e Dae i Ntr o eh e fSat u--iinReie tiona (seea vion(see amuto
Stats as- amended effect law IFund provided b7-Poet Annual explanatree paao eso o
-state Local State County Town Age Citizenship inoe footnotes) footnotes)

hl.a ..........------- 1915 197 i119 1915 Mandatory. Alaka Pioneers Home----- No local administration-----Territory administration---- AUl-----None-----. None...... Territory ---------------------M65 X -qled.. ) Noeflnsiifficlentmeonsof-------- - -X $1amnh:Qnry
{1925, 1929 ) 0 Rqh -- Non----- supot id, n------- ------ t $31 a month-
Arimona...-.------------ 1933------------ 1913 ------do----- State auditor ---------------- CountT old-age pension coin- Duplicate certificate to audI- 67 percent- 33 percent. Nono..... State and county-------------- 70----do---- 35 Required---.. (2) $0 a, I.--------BC$0--ot - Mnhy
C81111brals------------- 1929 1931, 1033. 1929- do-----.. Department of socisl welfare, mCaountybado. sprios annuallf-Nn-----d
Copeeor eviin;onh
report.- ne --- --- ----- 7 15L-----I $,0 65a , ,o
Division of State aid for the local department of pubio ly reports.
aged. welfare.
Colorsda--------------1927 1931, 1933. 1927----do.-....., Right of appeal to district Countycourt;boardofcounty Annual report to Secretary of State fund allocated to counties in State estate and liquor tax; 65----do---- is a-------------'2.Z000 165 a, b, a, d, it. ,B - o...Mnhyo le
court and supreme court. commissioners, trustees. State. proportion to popuilation, local liquor tax. terly.
Delawere..----------13 19--1931
03-------
1931 do-----State old-age welfare commis- ----. ---------------- State administration --------- AIL-----None---- None....- State current revenues---------- 65 Not re- 5 None-------- ------------ 300 a, d, I, 1,n-- $5amnhMnly
Siots. Iquired.'
Hawaii --------------- 1933 1933-----1934 Optional.---
Territorini auditor ----------- Old-age pension commission.--. Annual report to Territorial None---- Shared by county and Counties and cities----- 8--
5 30 years--- 15 ------------ (5) 300 a, I, L-------AB .. 1 ot o
auditor, city.
rIdab.---------------- 1931 ------------ 1931 Mandatory - Department of publlo welfare- --- do ---------------------- Annual report only----------- None---- All--- None........ County--------------------- 61 15 years-- 10 3------------- (3) 100 a, b,e,de,f Ie .A .$2 ot o
indians -------------- 1933------------ 1934----do......- State auditor ---------------- Board of county commission- Annual report; duplicate car- One-halL.. One,-half.. None.. State and county...,--------- 70----do..-- 11 15------------a 1,000 180 a, b, c, d, 'e ,AB,& $1amohD.
era. tificate to auditor. I, n.
b -w----------------- 1934------------ 1934----do....... Old-age assistance commis- Old-age assistance boarda.----Complete supervision -------.. AlL-----None----. None..... State poll tax..-----------------865----do------ 10 2-------- (5) ? 365 a, b, c, d, fI ,B ,$5amnhMnhyo us
sion. D. terly.
Kentucky ------------ 1928------------ 1928
Maine --------------- 1933-------------(4)
Optionafl--- None ----------------------- County commissioners -----
mandatory - Department of health and wel- Old-age pension hoards......-
None------------------- ---- Nona.-...... All ----- INone---- County ---------------------- 70----do----
Complete supervision----- - One-half--- One-half cities, towns, No provisions as yet------------ 65 Required..---.
10 10 ------
16 1--------
2,Soo
S-1am65
0
400 a, d, f, h, I, ~- 20aya o
ab, c, e, f, I.$
, ,B dyNtseiid
fare. plantations.
Maryland------------ 1927 1931-----1927 Optional--- None ---------- ------------ County commissioners ----- Annual report to Govornor,.ANUe,. Al-----None...... County ---------------------- 85 15years 101 - ..----- 36 ac0
,cd ef10n
e 0---------do------------Do.
Massachusetts------1930 1932,1933... 1931 Mandatory.. State department of public Bureau of old-age assistancea-- Complete supervision------One-third.. Two-thid cities and State poll tax; liquor tax ---- 70 Required --- 20 None---- None specifed-----d, "Deserving- ---- AduaesitDo
welfare. towns. citizens." snce.
MichIgan-------------- 1933------------ 1933----do-----State welfare department, old- Old-age pension board....- ------ do.---.---------..---.- AlL-----Nona........ None..----State poll tax------------------ 70 15 years O None ----
t--- - 3,500 5 365 a, b, c, d, fIL-A ,C .$0amnhMnhy
age pension bureau.
Mlnntest----------- 1929 1931. 1933- 1929 Optional.---- None ----------------------- Boardofcuntycomimlssioners. None..-----..-.------------------ None........ An----- Reimburse County, city, town, village.---- 70----do---- 15 15------------'33,000 365 a, o, d, a, f, ,n ,B .. $ a -otl rqa'
county. terly.
Montana ------- 93------------
1923-- ----- ­ do
do-----192 None ----------------------- Old-age pension commission..-- Annual report to State auditor. None ---- All ----- None ---- County poor fund ------------- 70----do ---- 16 None (---) 300 b, c, d, a, 1,f-A ,C..$3amnhMnhy
Nebraska..--.----------- 1933------------ 1933 Mandatory.. Auditor of public accounts ------ do --------------------- ----- do ---------------------- None ---- All-----None ---- County poll tax--------------- 61----do i
1---- None (---) 300 b, c, d, e, f, .- A ,C. 2 ot o
Nevada..-------------- 1925------------ 1925 Optional----.. None ----------------------- Bcerdofcountycommnlssioners. AnnualreporttoGovernor..---- None---- All..---.,-.--- None----- County ---------------------- 65----do---- 10 None-------- '3,000 390 a, b, c,d,efl A,,,.Saa - Mnhyo ur
terly.
Now Hampshre.------. 1931 ------------ 1931 Mandatory.- None..---------- ----------- County commissioners ----- None------- --- - ------ - None---- AIL----- Reimburse -----. do.---------------------. 70----do ---- i 15 1------------ 2, 000 360 a, o, d, a, f,,n.AB,...$70awekW klorm th
county. ly.
New lersey...------- --- 1931 1932,1933..- 1932----do..------. Department of institutions County welfare board------ Complete supervision------T iir ae- One-fourth None_-.... State Inheritance tax and 70 Required..---- 15 1-------------I- 3,600 (3) d, a, f, gf-A0$1adyMnh.
andsanciesdivision ofold- fourths, county fund.
New York..---------- -1930 1934-----1930----do-----Statedepartmentofsoclalwel- Public welfare district official- --- do ------- One-half --- One-half publlo we ttcuty, ciy7 - o1I-----Ualet upr ,d ,g....Dtrie yNtseiid
fare. fare district. self. oflicial.
North Dakota..-----1933------------.1933----d-.- Secretory of agriculture and Board of county commis-----....do ,--------------------- AIL-----None ---- Nona-., State special tax.--------- 68----do ---- 20 None--------- (5) 150 a, f, I, m, npAB$0ayerMnh.
Ohio ----- ---------- 19Ion------------193
labor.
.--- do-----Department of public wel-
sioners.
Board ofaidfor theaged----... .... do----------- .- . All------None ------ do-----Stats. ----------------------- 65 is years 151-----
1 ------
-I J
3,000 II
cou--Psa30ahod
SW a ,f--A
... ,B
.CD
,.
2
2
ot
ot
--
o
o
fare division of aid for the co I001
aged.
rgn--------- 1933---.....-.-.-1934----do...,.... State board of controL.......... Old-age pension commission---.. Annual report to State hoardPart of State liquor tax ---..do-----State liquor tax; county gen- 70----do ---- 15 2------------ 3,'000 I0 360 a, b, a, d, J~I .A ,0 .$0amnhMnhyo ue
of control. distributed to coun- oral fund. terly.
ties, balance paid by
cotanties.
Pennylvania -- --- 1934------------.1934 -... do.----- Department of w faeBoard of trustees of old-age Complete supervision------State fur. allocated to ----- Niate ---... 70----do ---- 15 None------ Indigent.---.-,-----a, b, a, d, L..0 - . .d-----Mnhy
assistance fund, counties according to
number IffePao
----- 1929- - ---- 1929--do--oIne-----
-----.- Board of county commins- None--- .....-....... None---- AL.-----None--.. County ----- --------- 65----do ---- 15 5-------------()300 a,bh,c, d,ea~ ,,... 2 ot o
sioners.
Wsbntn.......-. 93-----933 33 d - oe---------Boardoefounty coomssioersNone ------------------- None----All----- None....
---------- do ----.- ------ 65----do ---- 15 5------------() 360 a,bh,c, d,ea,I--- A.B.0.---- $30 amonth Do
Wetignl-.. 1931 '19,31 Opational...- None-----------County court ---- Annual audit by tax oommis- None----AlLL-----None-------do ------- 65----do ---- 10 10--------- No properly or In. a, d, e, I, gI,h. B-----day----------Do
aioner. come. I, n.
Wisconsin--- -.- 1925-I I92, 1931, 1925 (') State board of control------County judge ---- -. --------- Annual report --------------- One-third.. Two-thirds Reimburse State, county, local---------.,... 70 - d i1----do-------'$3,00 365 a, c, d, a, , I, ,B - oMnhyo ut
I1933 county. tely
wyosaing........... ~1929
. .1931-----I192 Mandatory. None----------------------- Old-age pension commissIon..- Annual report to State auditor. None----All ----- None----County poor fund.....---- 5-----5-do --- 15 5------ (') 360 b, a, d. a, . I...A ,0...$0amnhMnhy

Isinse 1906. Disqualifications: L.Habitual tramp, vagrant, or beggar. Other provisions:

5 Annual income of any property to be computed at 8 percent of its value, a. Inmate of any prison, jail, Insane asylums, or correctional institution. j.Unable to earn at least $1 per day. A. Transfer of applicant's property to pension authority myb eaddbfr
C Annual Income of any property to be computed at 5 percent of Its value. b. Desertion ofpuse. k.Sos and children able to furnish support. pension is granted.
'Required residence in United States 15 years. c. To have faie wihu utcuetroiespotfrwf admnrcid .I Convicted of crime Involving moral turpitude. B.Amount of payments to be collected from estate on death o esoe rteat
IWhen Governor can raise funds. d. Relatives legally liable sand able to support. m. To have failed to work according to ability. vivor ofia married couple.
4 House In which applicant lives not to be considered property, a. Senteece for crime. n. Inmate of benevolent, charitable, or fraternal institution. I C. Alvlowances- for funeral expenses.
I'Earnings and gifts up to $100 exempt. f. Disposed of or deprived oneself of property to qualify for pension.. O. Husband, wife, parent or child able and responsible for support. D. Payments may be made to charitable or benevolent insttuinfpesor
a Unable to maintain self. g.Naed of Institutional care. p. Children liable and aba to support. inmate.
IMauidatory from July 1, 1935, on. h.Recipient .1 pensio froI Federal, State or foreign govrznn.L
Saotem Compiled by Commaittee on Economin Security fron State laws, tao.s (an.68
 ECONOMIC SECURITY ACT 69
TABLE 16.-Old-age insurance and pension legislation in foreign countries through
1933
A. COMPULSORY CONTRIBUTORY OLD-AGE INSURANCE LAWS OF GENERAL
COVERAGE

Year
Country when Coverage
passed

Austria'1 --------- 1927

Workers in industry and commerce, including domestic workers,
except casual domestics. Special schemes for agricultural workers,
salaried employees, and miners.
Belgium 3 --------- 1924 All wage earners, including agricultuxal workers and domestics (except
casual domestics); and independent workers with incomes below
18,000 francs a year. Special schemes for salaried employees and
miners.
Bulgaria I --------- 1924 Employed persons, including agricultural workers and domestics.
Special scheme for public officials.
ChileI- ---------------- 1924 Wage earners under 65 earning less than 8,000 pesos a year; independ-
ent workers with annual incomes below 8,000 pesos a year.
Czechoslovakia I I------ 1924 Employed workers over school age and under 60, including agricul­
tural, domestic, and home workers. Special schemes for salaried
employees, miners, state employees, employees of statutory corpor­
ations such as railways. Special act for independent workers,
passed in 192, not yet enforced.
France II(see also sec. 1910 All employed persons under 60 whose annual earnings do not exceed
C). 18,000 francs a year in cities with over 200,000 inhabItants or indus­
trial areas, 18,000 francs elsewhere. (Income limit raised by 2,00
francs in respect of each child.) Persons employed in agriculture
subject to insurance aganlst old age and death only. Special scheme
for miners.
Germany I I£-------- 1889 All workers, including agricultural, domestic, and home workers.
Special scheme for salaried employees with annual earnings below
8,400 reichsmarks. Special scheme for miners.
Great Britain 1 3 (See 19265 All workers, including agricultural workers and domestics; salaried
also section C). employees with incomes below £250 a year.
Greece 1 3 ---------- 1922 All persons employed in industry and commerce.
HungaryI I S--------- 1928 All persons employed in specified employments. Employments
may be added by Minister's order. Salaried employees with In
comes below 8,000 pengo a year. Special scheme for miners.
Italy a ----------- 1919 All=eplye persons, including agricultural and domestic workers.
Salaidmloyees with incomes below 800 lire a month.
Luxemburg I I------- 1911 Workers in industry and commerce. Special scheme for salaried em
ployees In Industry and commerce.
Netherlands LI ...- --... 1913 All employed persons, including agricultural and domestic workers,
whose annual remuneration does not exceed 2,000 florins. Insured
persons whose remuneration rises shove 2,000 florins remain liable
to insurance. If their remuneration has been above 3,000 florins
for some time, they are exempted at their request. Special schemes
for railway workers and miners.
Poland I I--------_ 1933 All workers in commerce and industry. Insurable wage limit.
Portugal ---------- 1919 All employed persons over 15 years earning less than 900 escudos
annually.
Rumania I------------- 1912 All persons employed in industry and commerce, and craftsmen.
Special scheme for miners in Ardeal, which includes survivors'
insurance.
Spain ------------------ 1919 All employed persons whose annual earnings do not exceed 4,000
pstas. Domestic servants excluded.
Sweden I--------- _ 1913 Allcisetizens between 18 and 88 years unless already guaranteed pen­
sion under army, navy, stc.
Union of Soviet Socialist 1922 All manual workers; engineers and skilled technical workers; navi­
Republics.' I gating staff in civil aviation; various categories of salaried em-
Yugoslavia a ------- 1l922
Royees.
Alwage earners except household casuals, farm labor, and sea fisher­
men. (Not yet enforced.)
1924 All workers and other persons employed uinder mining sot.
1907 Salaried employees in Slovenia and Dalmatia who have reached
age 18and whose annual earnings are not less than 150 diners,

IOld-age insurance combined with Invalidity insurance.

I'Old-age insurance combined with survivors' insurance.
Source: Compiled from CompulsorV Pension Insurance, International Labour Offlce, Studies and
Reports, Series M, No. 10, Geneva, 1933; NoncontributorV Pensions,International Labour Office, Studies
and Reports, Series M, No. 9, Geneva, 1933; Insuriugthe Esseniiial, Barbara Nachtrleb Armstrong, 1932.
70 ECONOMIC SECURITY ACT

TABLE 16.-Old-age insurance and pension legislation in foreign countries througk

1933-Continued

B. COMPULSORY CONTRIBUTORY OLD-AGE INSURANCE LAWS OF LIMITED

COVERAGE

Year
Country when Coverage
passed

Argentina 13 -...- --... 1921 Public utility employees.

1924 Bank staffs.
Brazil ----------- 1923 Railway workers.
1928 Dock workers.
1931 Staffs of public utility undertakings.
Cuba 1 ----------- 1927 Seamen and harbor workers.
Ecuador' ---------- 1928 Staffs of banks.
Switzerland:
Canton Glarus I --- 1916 Legal residents between ages 17 and 50.
Appenzell----------- 1925 All legal residents between ages 18 and 64.
Basle Town I .... 1931 All persons between ages 20 and 65 who have been resident In the
Canton for 2 years.
Uruguay I I(see also sec- 1919 Staffs of public utility undertakings.
lion C) --------------- 1925 Staffs of banks and stock exchange.

C. NONCONTRIBUTORY OLD-AGE PENSION LAWS

Australia I --------- 1908 All citizens with insufficient income, resident 20 years.
Canada ---------------- 1927 All citizens with insufficient income; resident In Canada 20 years, in
Province 5 years.
Denmark--------------- 1891 Citizens with insufficient means, resident 5 years.
France I (see also eection 1905 AU citizens with insufficient means.
A).
Great Britain (see also 1908
Citizens with insufficient means; 12 years' residence since age 50 for
section A). natural-born citizens; 20 years' residence in all for naturalized sub-
Jcts.
Greenland-------------- 1926 Alle Greenlanders without subsistence Income.
Iceland 1-----09__
W Citizens with insufficien; means.
Irish Free State--------­ 19I8 Citizens with insufficient means, resident 30 years.
Newfoundland ---------- 1911 All citizens with insufficient means.
New Zealand------------ 1898 Citizens with insufficient means and 25 yeacs' continuous residence.
Norway (will not go into 1923 All citizens with insufficient income.
effect until announced
by Royal decree).
South Africa------------ 1928 All citizens (of 5 years' standing) with 15 years' residence out of pre­
ceding 20 years; other persons with 25 yeers' residence out of pre­
ceding 30 years; insufficient income.
Uruguay I (see also see- 1919 All persons with insufficient means. (For naturalized subjects or
tion B.) aliens 13 years' residence is required.)

I Old-age pension legislation combined with invalidity pension legislation.

'Old-age insurance combined with survivors' insurance.
 TABLE 17.-Principalprovisions of foreign nwncontributoryj old-age-pension' iats through 19,53

Qualifications for recipients

YeAarn-icAmdminionstaiverespob
wenOther Agetr Diqail rprylmtkaa-noelimit PrpryeepinAnn-noee.Amount of PeaiuSource of fund Ad sitrtivety P
cations

Australia'I------------ 1908 NlenfS,' British subject---- 20 years in union ----------- a_---A, B. O--- £400-------------------------------£S33-----------------£950 £932 10 a.; benefits MaxlmnmX4510s.ay
------------------------------- 5 Reduced Commonwealth------------ Federal Government
Worn- from friendly socie-
House In which pensioner resides. by£1 for eacls1l of property except
e D lii.' and trade un-
ties In;allowances exempt property.
from children; war
pensions.
Canada. Effective in 1927-----------British subject----.. 20 years in union; 5 years In ----- B------Annual income of real property taken $3651----------------- See propertylimimt------------------- $1259----------------- Maximum $240 a year, I reduced by dominion; )4 province.... Shared by dominios
Sprovinces: Alberta, province, at 1 percent of its value,' income of amount of pensioners income (lee and provinces.
British Columbia. personal property-government an- exemption).
Manitoba, Neaw nulty purchasable with It.
Brunswick. N o va
Scotia, Ontario.
Prince Edward Is­
land. Saskatchewan. rdcopemami
Denmiark------------- 1891 65 i---Required------ 5 years in state ------------ -------- D. E. P..---. Annual income of property taken at 275 to 175 kir. (vary- Annual Income of property taken at 100 to 200 kr. (very- Mared culm imm 600 to I,181 7/12 state: 5/12 commiunes--- Shared by central gov­
4 percent of its value. ing with locality) 4 percent of its value. tog with locality). kr.6; single man, maxtinnm 402 to 878 erilnent and iocal­
plus maximum pen-
sion applicable.
kr.6; single woman, ~naximum
to 642 krone;G adjustA d to means.
378 iWas.

Prance I1 - ----- 10
i----- 0------- -----do -~..-------None.---.. -------
---------------- G-0-----Income from capital equal tolWeannu- 2,400 francs plus earn- Income frommcpital equal tollfeannu- Earnings of pensioner, Maximum 600 to 900 Ef&ans (varying State pays 240 franc- OneaCh1 Do.
ity purchasable with It. ings of peujioner. ity purchasable with it. 400 francs from say- with locality).' pension; commaune pays
logs (600 francs if blance.
pensioner has raiqed
- 3 children to age IS).
Great flrlt Io ---- 1908 70-----Britishsubject--- 12 years sinceagel0 fornat ------ E------Annual income from first £375 property £49 17s. 3d----------- Income fromn£S2lof property; XNannual Income derived from Maximum i0s. aweek; teduced in pro- State --------------------- Central goveirnmetnt.
uiral-borm citizens, 20 years (other than property personally sources other than earnings; £26 5s. annual income derived portion to pensioner's income.
in all for naturalized sub. enjoyed by pensioner) computed at from soy source; furniture and personal eflects; sickness
jet. percent balance; at 10 percent. benefit fron, frinl oceyo raeuin
(iceenland------- 19 6I5- Requiredrcmsanes----------
5----Reurd--------------------------1a -------- ------------------------­
a-------------nnesitucrumacs-------------------------- --------------------- Amount fixed by distrt~i council ---- District Partly relimbursed ---------------­
by State.
Iceland---------I -------------------------------- ------------------------
a--------- ---------------------------
nncsioscrusacs-----------
a-------------Inncsitu-icmsacs------------------------ -Minimum 20 kr. a year;msxiJmum 200 Poll tax On al! peisonsi be-------------------
Ikr. a year. tween IS andi CC,years.
Irish Free State.....1901 70---- Not required ---- 30 years in all; 5 years since----- E-B-----Annual Income from first £371 prop- £393s --------------- Annual income trom£25 of property. £15129. Sd. annualin- Maximum 10s. a week; reduced in State---------------------- Central government.
age 10 for citizens, 16 years erty (other than property person- come; furniture anti personal effects; sickness benefit from proportion Lopensioner's income.
for others. ally enjoyed by pensioner) corn- friendly society or trode union.
puted at 6 percent; balance at 10
Newioundhind ----- 1911 7.' '----Not required---- 20 years in State....----------- ---------------- - 'I need"..------------------------------- ----------------------- --------------------------------- $50 a year ------------------------- State------------------------­
New Zehltuud----------1S98 N.len 651, Britishi eubject ---- 25 years in State.----------- a A, C, D, £460; annual income of property £80; married couple, £50--------------------- 3--------------- Maximum £40 l9s. a year;' reduced in----do -------------------- Central government.
worn M E. fixed at 10 percent for all property £ 121. Funeral benefit from friendly society; house ~including
furit~ure proportion to means; increased for
en oo.' exempt exempt property (£10). and personal effects) in which pensioner lives provided own- pensioners with 2or maore dependent
ership is transferred to pension authority.) children.
Norway ---------- 1923 70-....Required ------------------------------------- a------------- Inadequate income --------------------------------------------------------------------- ------------------------ Fixed so that 60 pereent of amount 10 percent State, iii percent------------------­
will buy niecessairies of life. co"munue.
South Africa ---------- 1824 65-----Not required---- 15years cut of 20 just before---- A, G, H... Annual Income from any property £14 for white personst; Annual Income from property owned £24 for white persons; Maximum £30 a year for white per- State---------------------- Centrli govarnment.
claiming for persons who owned and occupied by pensioner £30 'or colored per- and occupied by pensioner and £18 for colored pen- sons; maiu 18 yar for col-
have been British subjects and from all other uninveated assets eons, from other uninvested assets coin- sons. ored persons; irducec) in proportion
for 1 years; 21 years out of computed at 10 percent. puted at 10 percent. to pensioner's means.'
30 for others.II
Uruguay--------- 1596---------- do------None required for natural----- 0------- Property must be expressed in terms 202 pesos a year-----Property most be expressed in terms 10 pesos ------------- Maxmum 96 pesos a y ar; reduced in A number of special national Do
born subjects; 15 years for of annual income, of annual income, proportion to pensoiolr's means. taxes.
naturalized subjects or

aOld-age pensions comb'nea with invalidity pensions. I Nocnrbtr pensions being replaced by contributory Pensions. D. Iprisonment for dishonorable action.
' Reduced by 1 years in case of incapacity for work. S 65 for widow of beneficiary. E. Haitual drunkenness.
IPension authoritLy recovers amount of pension on death of pensioner or of survivor of married. couple. I'Reduced by 1 years for claimants having 2 or more dependent children wider I1. P.Reip
. eaces relief within 3 years of claiming.
ip of pooreantbetoSpot
' if authority accepts transfer of house in which pensioner resides, value is diuregarded in assessing is Will not go into effect until announced by royal decree. G. aie iheadal ospot
means and peioner lives in It rent-fres. a. Good character. H. boriginal natives.
*Rdcdby ayears In cese of incapacity for work. A. Persons of non-European extraction.
'Pension is varied in accordance with locality in which penstioner lives and is increased if sending in of B. Aboriginal natives living under tribal conditions.
application for pension is deferred beyond age 66. 0. Desertion of spouse.
Souroe: Compiled from Newoo~leusftwrp Pmaairaae. International Labour Office Studies and Reports, Seiries M. Ne. 0, Genayt, 1933; Iuaseisau Me Raunlie ls, Barbasa Naohtrieb Armstron. 1932. 1157-SL (Famep. 21)
 ECONOMIC SECURITY ACT 71
TABLE~ 18.-Estimated number of families and children receiving mothers' aid and
estimated expenditures for this purpose
[Based on figures available Nov. 15, 19341

Number of Number of Estimated present annual expenditures for

families children mothers' aid, local and State
State r ci n benefiting _ _ _ _ _ _ _-_ _ _ _ _ _ _-_ _ _ _ _ _
mohes from moth-
aid ers' aid Total LocAl State

Total--------------------- 109,036 280,565 ' $37, 487, 479 IS31.621,957 '$S.86,1522

Alabam a 3 - - - - - - - - - - - - - - -i6-- - - - i - - - ­
Arizona------------------------- 10-39 20-40----------------- 2,4
A rkansas iI--- - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - -- - - --- - - - - ­
California -.--------------------- 7,050 17, 642 2, 133,9009 224. 252 1,009, 747
Colorado ------------------------ 552 ' 1,435 149, 688 149.69 ----­
Connecticut--------------------- 1,271 3,278 734, 627 489, 752 24 7
Delaware ------------------------ 348 855 93, 000 46. 500 46,500
District of Columbia-------------- 3209 720 143,997 143, 997 ------­
Florida ------------------------- 2,564 8,164 222, 280 222, 286...........-­
Georgia'.......................................................................--- ----------­
Idaho'$.-------------------------- 2M0 619 36,315 38,3151--­
nulnois ------------------------- 8.,217 14.802 1,837.012 1.033, 217 303, 796
Indiana ------------------------- 1,332 3. 856 312, 224 352. 224...........-­
Iowa --------------------------- 3.127 '9,170 719, 772 719. 772 ------­
Kansas-------------------------- 768 '1,997 75.721 71,721...........-­
Kentucky ----------------------- 137 ' 356 62,889 62,889...........--­
Louisiana------------------------ I 88 ' 229 9.312 9.312---­
Maine--------------------------- 817 ' 2, 124 310, 000 113. (44 15.0
Maryland -------------------- I 267 '8694 117,419 117,419......
Massachusetts------------------- 3.939 11,817 2.450. 000 1,400,000 1.0506,000
Michigan ----------------------- 6,938 ' 18,039 2,448, 962 Z,448.0062...........-­
Minnesota ---------------------- 3.597 9,112 1,138, 176 1,138, 176 ------­
Mississippi'.....................................................................-------------­
Missouri------------------------- 330 ' 874 93. 440 93, 440...........-­
Montana'I----------------------- 839 1,969 213,8622 213, 02.3...........-­
Nebraska ----------------------- 1,834 4'4.300 272,038 272. 036...........-­
Nevada' ------------------------ 200 ' 520 44. 036 44,035---­
New Hampshire------------------ 280 761 882.440 ---------------- $02,41
New Jersey---------------------- 7,711 18, 789 2,44,56 4 - -----------­
N ew Mexico'4- - - - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - -- - - - - - ­
New York ---------------------- 23,493 56. 62 11.731.176 11, 731,176..........
North Carolln4------------------- 314 94? 68~,706 29, 353 20.i313
North Dakota I'------------- 978 2.644 238.314 228.314.............
Ohio --------------------------- 8,923 24.470 2,114,9WAI0 o,1.
90...........-­
Oklahoma 'I.-------------- 1.896 6.166 1'22.314 122,314...........-­
Oregon ------------------------- 1,040 2,2.59 247. 140 247.1(40.........
Pennsylvania ------------------ - 7,700 22, 687 8, 197. q40 1,594. 820 1 9 2
Rhode Island--------------------- 8513 1,666 287,252 133, 620 133,628
South Carolina'I- - - - - - - - -- - - - - - - - - - - -- - - - - - - - - - - - - - - -- - - - - - ­
South Dakota'&------------------ 1.290 3,324 285, 986 285. 9P-------­
Tennessee ----------------------- 241 ' 627 71,328 71. 328 ------­
Texas--------------------------- 332 ' 865 43,987 43.987...........-­
Utah---------------------------- 8622 ' 1,817 78,631 78.631 ---­
Vermont ------------------------ 206 461 46,976 22.4868 2,6
Virginia ------------------------- 136 145 33. 878 16.038 16,938
Washington '------------- 3,013 ' 7,834 519, 138 519, 538...........-­
West Virginia--------------------- 109 ' 281 16.08N 16.084..........
Wisconsin----------------------- 7,173 17,932 2.180,790 1,930,790 256,0006
Wyoming'- ---------------------- 95 279 22.294 22,294 ------­

'Includes revised figures for Illinois.

I'No mothers' aid law.
' Mothers' aid discontinued.
' Estimated on basis of 2.6 children per family, the average rate for 20 States reporting In Decembe 1933.
' Estimated on basis of trends in comparable Slates from which reporte have been received.
' Law not In operation.
Source: The U. S. Children's Bureau,
72 ECONOMIC SECURITY ACT

TABLE 19.--Funds3 for State maternal and child-health work,

1928 Percent Percent

____
________
____ __ ___ ____ ___Increase decrease
State 1934 1934 1034
Total funds Federal State over under
1928 1928

Delaware ------------------ $18,008.02 $11,504.01 $8,504. 01 $33,000.00 83. 3 .---­

Pennsylvania--------------- 132,621.98 68,810.99 63,810.99 197,539.00 48.9 ----­
Maine --------------------- 25,000.00 15,000. 00 10, 000.00 26,300. 00 5. 2 .----­
Massachusetts. ----------- 78,275. 00 ------------- 78,275. 00 80,850. 00 3.3.----­
New Hampshire ------------ 20,076.62 12,988.31 7,958. 31 21,620.50 3.1 ----­
Rhode Island--------------- 24,276. 28 14, 076. 28 10,200.00 24,005.00 ----- 0.9
Illinois--------------------- 70,000.00------------- 70,0O9.00 09,070.00------ 1.3
Connecticut---------------- 132,750. 00------------- 32. 760. 00 29,392. 00------------ 10. 3
New Jersey ---------------- 108,103.55 31,284.55 86,879. 00 103,872.52------------ 12. 1
Wisconsin ------------------ 850,752. 00 27, 751. 82 2:1,000. 38 43, 350. 00------------ 14. 6
Maryland ------------------ 33,954. 00 19, 277.00 14,277. 00 20,844. 00------------ 20. 0
Minnesota------------------ 47,000. 00 26,099.65 20,900. 35 36,000. 00------------ 23.4
South Dakota--------------- 7,500. 00 7,500. 00--------------- 5,000.00------------ 33. 3
Arizona -------------------- 19,507. 42 12, 253. 71 72,%23. 71 12,890. 00------------ 33. 9
New York ----------------- 210.041. 78 80,041. 78 130, 000. 00 134,500. 00------------ 36. 0
Virginia-------------------- 75,574. 00 25. 574. 00 50,000. 00 40. 372. 00------------ 40. 6
Kentucky ------------------ 47, 597. 48 20,298.64 21, 298. 84 25,200. 00------------ 47. 1
Michigan------------------I 04,741. 11 34, 741. 11 30, 000. 00 31,940. 00------------ 50 7
Missouri ------------------- 49,186. 81 24, 186.81 25 000. 00 23,799 00------------ 51 6
Texas---------------------- 77,902. 52 41,410.52 36,452. 00 34,880. 00------------ 55. 3
Montana------------------- 24,400. 00 13, 700. 00 10, 700. 00 10,500. 00------------ 57. 0
Georgia -------------------- 64, 435. 89 35, 451. 10 28,987. 79 928,000. 00------------ 59.7
North Dakota--------------- 8,000. 00 6,500. 00 1,500.00 3,056. 00------------ 61.8
North Carolina------------- 49,519.886 27,259. 50 22. 200. 00 18,600. 00------------ 6A2.6
Washington----------------- 8,387.00 8,000. 00 3,347.00 3,000.00------------ 64.2
Mississippi ----------------- 49, 076. 28 22,076.88 27, 000. 00 15, 150.00------------ 069.1
Wyoming------------------1I10,000. 00 7,500.00 2,500. 00 2,500.00------------ 76.0
Louisiana ------------------ 30,942.00 7,521.00 22,521.00 7,000.00------------ 76.7
Kansas--------------------- 35,000.00 20.000.00 13,000.00 8,000.00------------ 77.1
West Virginia--------------- 40,443.48 19, 571. 74 20,871. 74 9, 140.00------------ 77.4
Hawaii--------------------- 18,451.92 11, 725.96 6,725. 96 4,100.00------------ 77.8
California------------------I 57,580.00 31,290.00 28, 290. 00 12,225. 00------------ 78.8
Florida_---------------37, 906. 00 16, 531.72 21,374. 28 7, 330.00 ------------ 80.7
Ohio -- :---------------------- 53,334. 00 23,885. 57 29,748. 43 10,048.00------------- 81.2
Oregon--------------------- 27,5.33.48 18, 283.40 12, 250.00 4, 701. 00------------ 82.9
Iowa----------------------- 42,296. 91 21,085.31 21, 213. 60 8,000.00------------ 84.4
Idaho---------------------- 12,500. 00 7,500.00 8,000.00 1,430. 00------------ 88.6
South Carolina-------------- 37,71-1. 30 21,355. 65 16, 355.65 2,046. 00------------ 94.6
Tennessee ------------------ 55,767. 00 25,767.00 30,000.00 2, 9l2.t0------------- 94.8
Alabama..,-----------------864,173. 90 25,836.95 33,336.95 2. £20. 00------------ 96. 1
Arkansas ------------------- 238,535. 02 21,817.51 16,817.51..........................-----­
Colorado ------------------- 15,000.00D 10,000.00 5,000.00..........................-----­
Indiana -------------------- 53,997. 00 11,927.00 21,970.00..........................-----­
Nebraska ------------------ 17,000. 00 11,000.00 6,000.00 ------- ­
Nevada -------------------- 10,044. 00 10, 522.00 6, 522.00.............
New Mexico---------------- 19,060. 66 12.430. 33 7,430. 33-------­
Oklahoma ------------------ 42, 358. 98 23.679. 48 18,079 48 ------- ---------­
Utah----------------------- 20,500.00 12,500.00 8,000.00..........................-----­
Vermont--------------------65,000. 00 8,000.00 ------- ------- ---------­

I For four States (California, Connecticut, Michigan, and Wyoming), 1929 figures are given.
Source: The U. S. Children's Bureau,

TABLE 20.-General economic statistics

INDICES OP BUSINESS CONDITIONS'
11923-25=100]

1929 1932 1934 (first 10

months)

1. Index of industrial production'I-------------------------------- 111 64 s0

2. Index of factory pay coils 2 .......................... I08 45 62
3. Index of factory employment I---------------------------------- 101 62 79
4.Index of freightecar-loadings 2----------------------------------- 00 56 63
5. Index of department store sales (value) I----i------------- ill 09 68
6. Index of construction contracts awarded (value) ------------ 117 28 83
7.Index of exports (value) 3--------------------------- 115 35 49
8. Index of bank debits outside New York City------ -------------- 140 05 69
'Survey of Cuzrrent Business, February 1934, P., and Decein­
her 1934, p. 3.

I Unadjusted for seasonal variation: adju-tcd for numnber of working lays.

I Unadjusted for seasonal variation.
I Adjusted for seasonal variation.
 ECONOMIC SECURITY ACT 73
TABLEa 20.-General economic statistics-Conrtinued
OTHER ECONOMIC DATA
9. Number of gainful workers, September------------------------------------- 1934-- 50,277,000
Estimate of Committee on Economic Security.
10. Per capita foil-time income, wage, and salaried employees -------------------- 1929... $1,475
1932-. $1,199
National Income, 1929-S2, Letter from Acting Secretary of Commerce, S. Doc. 124,
7311Cong., 2d ass.;., p. 19.
11. Average weekly factor y carniagzs per wage earnier ---------------------------- 1929.. $28. 54
1932.... $17. 10
1934-- $20.08
Survect Corrent Bosiness, February 1931, p. 7, and December 1934, p. 7. Data for
1934 for first 10months.
12. Indcx of cost cf icing (i913= 190)............................------December 1929.. 171
December 1932... 132
June 19314.. 138
Monthllcy Labor Review, August 1934, p. .526.
Ol.D-AG;E DATA
13. P'opulalion, 1930.................................0------ 0 years of age and cever... 10,385,026
65 years of age and over... 6,833, 806
70 years of age and over... 3,883, 200
Fifteenth ('ensue. of I he U1.S., 1930, vol. 1I, Popcationfe, p. 576.
14. Numbiler of old-age lensioners......................................--------1931.. 78,339
1`924.. 180,003
Data for 1931from .5Iontl~t Labor Review, June 1932, p. 1261. Data for 1934 corn­
pilel1 by Commrittee on Ecnornoic Security from latest available information.
1.5 Amount wild in old-age pon~iocns..........................................----1931.. 816,173,207
1924.. 31, 192,492
1)ata for 19331from MSonthlyULabor Review, June 1932, p. 1261. Data for 1931 comn­
piledl by ( cimmiittee on Economic Security from latest available information.
NATIONAL INCOMIE STATISTICS
16. National snconce pcaid out.........................................-------192_ _9.$2,300, 000, 000
1933.. 46,800,000,000
The National Lnoreme, 1933, release isan. 14, 1935, p. 6, Department of Commerce.
17. National income pad out.........................................--------1933-.846,8%003,ooo0o
Wages and saaries.................................................---------29,300,000, 000
Isividends and interest..............................................--------7,300,000,000
Net rents and royallies..............................................-------~ Za300,000,000
Entreprenurial withdlrawalk..........................................--------7,900,000,000
The National Incocme, 19.3,release Jan. 14, l9tS, p. 6, Deportment of Commerce.
18. National income paid out.........................................--------1932--W$e, 894,000, 000
IBusiness savings, or los-ises..--.-------------.-.---.-.-.---.-.---.................9, 529,000,000
Ineocne produced.................................................----------39,365,000,000
National Income, 1929-S2, letter frocic Acting Secretary of Commerce. S. Doc. 124,
73d Cong., 2d ress., p. 10.
WHOLESALE, RETAIL, AND MANUFACTURING SALES
19. Net wholesale sales......................................................-----192§..$ss 950 t08,oo
1933.. 32,030,804,000
Final United States Su~mcnary of IWtotesvate Trade in 19.18,Department of Commerce,
Bureau oflthe Census, p. 7. The I-199flgures have been revised.
20. Net retail sales.................................................----------1929. .849.114,653, 000
1933.. 25,037,225,000
United States Summasry of the Retait Census fer 1933, Department of Commerce,
Bureau of the Census, p. 3.
21. Gross value of manufactured products................................-------1929..$6o9 960,909.712
1933.. 31, 358, 840, 392
C~ensucs of Matneufactures: 19,33,Department of Commerce, Bureau of the Ceneus, P. 1.
The 1929 figcures have been revised.
LIFE-INSURANCE STATISTICS
22 Aggregalielifeinsccranceinforce-.....--.--------------...................---1933.4$97.985,043,747
Ordinary........................................................----------71, 918,829, 182
Industrial.......................................................----------17, 154, 472,848
Oirotp..........................................................-----------8,911,741,717
Spectator Co., Year-Beak--Life Insurance, 1931.
23 Aversge size of life-insurance policy in force, 1933:
Industrial...............................................................----210
Compu~tedc from Spectator Co. Year-Reek-Life Insurance, 1934.
24. Surrendered pohiclos and loans, life insucrance...........................-----1933.. $e, 394,948,087
Spectator Co., Year-Book-Life insurance, 1934.
AlFo letter from Spectator Cog
 74 ECONOMIC SECURITY ACT

TABLE 20.-General economic statistics-Continued

SAVINGS ESTIMATES
25. Annual savings through life insurance-------------------------------------- 1933 - $2.950, 465, R99
New premium payments ---------------------------------------------------- 234,951. 196
Renewal premium payments ------------------------------------------------ 2,715.511, 703
Spectator Co., Year-Book-Ll~e In8suranace. 1934.

26. Savings and other time deposits------------------------------------------- 1929- $28, 2IR, 000, 000
1932-. 24,231.000,000
Data for all reporting banks in United States.
Sltatitical Abstract of the United Staft8, 1933, p 242, table 2.52.

0
 LISTING OF REFERENCE MATERIALS

Executive Order 6757. Establishing the Committee on Economic Security and the Advisory
Council on Economic Security, June 29, 1934.

U.S. Committee on Economic Security. Social Security in America: The Factual Background
of the Social Security Act as Summarized from Staff Reports to the Committee on Economic
Security.

Message of the President Recommending Legislation on Economic Security. (House Doc.

No. 81) January 17, 1935.

U.S. Congress. House. Committee on Labor. Unemployment, Old Age, and Social Insur­
ance. Hearings, 74th Congress, 1st session, on H. R. 2827, 2859, 185, and 10.

U.S. Congress. House. Committee on Labor. Workers' Unemployment, Old-Age, and Social
Insurance. Report to Accompany H.R. 2827. (H. Rept. 418, 74th Cong., 1st sess.)

U.S. Congress. House. Committee on Ways and Means. Economic Security Act. Hearings
on H.R. 4120,, 74th Congress, 1st session.

U.S. Congress. Senate. Committee on Finance. Economic Security Act. Hearings on

5. 1130, 74th Congress, 1st session.

Presidential statement upon Signing the Social Security Act. August 14, 1935.