I am one who believes that the preservation of democracy requires the decentralization of many powers now lodged here in Washington and their assumption by the citizens of the States. The employment security program in my estimate could best be administered wholly by the States without reference to controls or financing by the Federal Government. In my judgment, the States should collect the entire tax and provide for their own administration out of the taxes thus raised.

I might add, incidentally, that Wisconsin launched its first unemployment security program independently of the Federal Government, some years before the Federal act was passed, and financed and administered it successfully. We are confident that we could resume this responsibility, and I am happy to learn of the existence of a taskforce report of the Hoover Commission, which I understand has not been published, but in my estimate would make most interesting reading. This record recommends that the employment security program be wholly returned to the States. And I am sorry that the Hoover Commission did not take action with respect to this sound recommendation. It was likewise the unanimous conclusion of a group consisting of 15 Governors, 10 Congressmen representing the Ways and Means Committee, and 8 Senators, members of this committee, I believe, that the employment security program should be returned to the States. This seems to me added reason why the action here contemplated should not be taken. I believe that the Congress should thoroughly investigate and study these essentially sound proposals to return these functions to the States, and that pending this investigation and study, the situation should not be further complicated by this proposed transfer.

Thank you.

The CHAIRMAN. Thank you, Mr. Wrabetz.
Any questions, Senator Long?

Senator LONG. I believe you said, Mr. Wrabetz, that someone recommended that the complete Hoover Commission plan be put into effect.

Mr. WRABETZ. No, I said that the task force of the Hoover Commission recommended the transfer of these functions to the States; that is, social security, the unemployment compensation law administration.

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Senator LONG. Did you not say that someone recommended that the

complete Hoover Commission plan be put into effect?

Mr. WRABETZ. No, I didn't say anything of the kind.
Senator LONG. I take it you feel that the States should each collect

their own taxes on unemployment compensation.

Mr. WRABETZ. Yes, sir. We did it for at least 3 or 4 years.

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Senator LONG. I would like to get your reaction on this. Senator Lodge stated on the floor with reference to the closed shop proposal that he was taking the labor side of the issue because he felt that his State was suffering by having labor laws that were more favorable to labor than was the case in a lot of Southern States, and he claimed there was competition among the Southern States to see which could be the strongest in pro-management leanings in order to attract industries there.

Do you believe there is a tendency for industries to migrate toward the States that have the lowest compensation tax, for example?

Mr. WRABETZ. I am sure I don't know. I don't see how it concerns this particular problem, but it might. I can conceive of an industry migrating to the South if the conditions were more favorable.

Senator LONG. It would not necessarily concern the South. It could concern any State. But when you say that one State might charge a tax for unemployment compensation and another State might not, would there not be a tendency on the part of industries, in weighing the factors, to see where they should go, to pick a State that did not make them pay any unemployment compensation?

Mr. WRABETZ. My statement may not be a complete answer to your question, but I think it is. For instance, in the field of workmen's compensation—

Senator LONG. I am thinking about unemployment compensation at the moment.

Mr. WRABETZ. I can't make my point unless I refer to workmen's compensation.

Senator LONG. Go right ahead.

Mr. WRABETZ. Because these laws have been administered by State agencies from the very beginning, and are still being administered by States. States still spearhead it and make advancements in both liberality and simpler administration, without undue regard to what has been done in another State. There are several States that stand away out in front in their leadership in establishing liberality in the law, such as New York State. We are proud in Wisconsin that our workmen's compensation benefits are probably as liberal if not more so than a majority of States. But that does not deter us from enacting even more liberal laws. And we hope that by our example, by the example of New York, by the example of California, what we sometimes call backward States might be urged to amend their laws to make them more liberal.

And so too, in the field of unemployment compensation, some States, if they fully administered the laws, might spearhead the movement and, by their example, improve the laws in other States, not only as to benefits, but as to eligibility and noneligibility and all the rest of it. Senator LONG. Of course, I feel that in my own State they have tried to spearhead the forward advance in a liberal program. But would you not feel that possibly we should have some Federal minimum as far as the interstate commerce phase of the business is concerned, at least, to bring all the country up to a certain minimum, just as we have a national minimum wage? Should we not have a certain minimum on employment security, for example?

Mr. WRABETZ. We have not needed that in the development of other laws, and I don't know why we would need it in the field of unemployment compensation.

Senator LONG. I cannot recall that we had any unemployment compensation at all in my State until the Federal Government got into it.

Mr. WRABETZ. No, Wisconsin was the only one that administered the law for some years. The only one; that is correct.

The CHAIRMAN. Senator McCarthy?

Senator MCCARTHY. Just to have the record straight, Mr. Wrabetz, am I correct in this: that when you were first appointed by Governor Zimmerman, later by Governor Kohler, later by Governor La Follette,

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later by Governor Goodland, and finally by Governor Rennebohm, you had the wholehearted support of labor in Wisconsin?

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Mr. WRABETZ. Yes. And they have always known my position experience rating. And actually they have participated on the advisory committee to strengthen the law with respect to that.

Senator MCCARTHY. Just so that the other members of the committee will be aware of this situation, I think I should state for the record that Mr. Wrabetz has the reputation of being a very, very good friend of labor. I assume that will be kept in mind when his testimony is evaluated.

The CHAIRMAN. Senator Ives?

Senator Ives. I thought I understood you correctly, Mr. Wrabetz. Perhaps I did not. Did I understand you to say that by regulation the agency administering this particular function of unemployment compensation could completely eliminate experience and merit rating? Mr. WRABETZ. Yes.

Senator Ives. You were here yesterday, were you not, sir?
Mr. WRABETZ. Yes, sir.

Senator Ives. I did not go so far, in my understanding of the thing, as you have gone in your testimony today. I did not assume that they could completely eliminate it. The question that I directed at Secretary Tobin was to the effect of whether, by regulation, and interpretation and administrative action, they could almost eliminate it, while, nevertheless, they would have to give consideration to this famous section 1602, I think it is, which lays down certain standards, which would have to be followed.

I would like to say that in view of the fact that Secretary Tobin very definitely, you will recall, indicated that they could not eliminate it, and that they had to follow that particular section, and that it was their guide, I would like to have some kind of a reconciliation here. Because I am right between the two of you. It was my impression that they could almost do it. It is your impression that they could completely do it. It is Secretary Tobin's impression, apparently, that they cannot do it at all.

Mr. WRABETZ. This is the provision which I read today, and I would be glad to read it again.

Senator Ives. Yes. I heard it yesterday.

Mr. WRABETZ. Those are the only standards by which the matter could be determined.

Senator IVES. I think you will have to admit that it is largely a matter of what might be termed interpretation. You construe it, by interpretation, that they could virtually eliminate it. Mr. Tobin-construes it, by interpretation, that they could not possibly eliminate it.

Mr. WRABETZ. I also said that I did not think Secretary Tobin would do it.

Senator IVES. I know. And I am not criticizing anybody. I am just pointing this out.

Senator MCCARTHY. Senator Ives, I know, has had a tremendous amount of experience in this, as well as Mr. Wrabetz. Am I correct in this: That Secretary Tobin or any other Secretary could interpret the law as he sees fit, and there is no appeal from such a decision?

Mr. WRABETZ. That is right. There is no appeal from the decision. Senator MCCARTHY. So that actually the Secretary could interpret the law in any way he sees fit.

Senator LONG. You can always appeal to Congress, can you not? Senator MCCARTHY. You cannot administer a law in Congress, Russ.

Senator LONG. It appears to me that if that law is so vague as not to pin the Secretary down at all, possibly the law should be amended to set some standards. And I would say that if the Secretary were to abuse his authority, the law should certainly be so amended.

Senator IVES. You were here, Mr. Wrabetz, yesterday, as was pointed out, and you will recall that I asked Secretary Tobin some questions about regional offices and the matter of expenditure in connection with the operation of this agency if the changes suggested here were made. You will recall that Secretary Tobin estimated that there would be no substantial difference in the matter of cost. I happen to know that you have had some experience in this field, and I would like to get your observations on that if you would be willing to give them.

Mr. WRABETZ. I believe Secretary Tobin said that there were in existence regional offices, of the Labor Department.

Senator Ives. That is right.

Mr. WRABETZ. I would like to know the one that serves Wisconsin. I would like to know where it is. There isn't any that I know of. It was abolished a year ago, if they did have one then, and it was, I suppose, in the Chicago office of the Social Security Administration. But there isn't any office that I know of now, or if so, it certainly hasn't been called to our attention. And undoubtedly the Department would have to establish regional offices, and to that extent the expense would necessarily have to be increased. There is just no way out of it.

Senator Ives. Then in your judgment, this would not be an economy move. Is that it?

Mr. WRABETZ. It certainly would not.

Senator IVES. My question was directed to that yesterday, and it is again, here, with you. In other words, there might be greater expenditure as a result of this shift than otherwise.

Mr. WRABETZ. And if the transfer were found by the Congress to really be beneficial, and if it would increase the efficiency, I don't think the mere expense should stand in the way.

Senator Ives. Thank you.

The CHAIRMAN. Senator Smith?

Senator SMITH. No questions.

The CHAIRMAN. Mr. Wrabetz, you spoke of an unpublished task

force report of the Hoover Commission.

Mr. WRABETZ. Yes.

The CHAIRMAN. I believe you will find that this committee had the report published, and you will find it in Senate Document 81 of the Eighty-first Congress, if you would care to have it.

Mr. WRABETZ. Yes, I would. What is that document again, please? The CHAIRMAN. Senate Document 81 of the Eighty-first Congress. I believe you will find in that document, the task force report of the Committee on Federal and State Relations, headed by Mr. T. J. Coolidge as chairman, page 231. You may obtain a copy of it from the clerk, if you care to.

Mr. WRABETZ. I would.

The CHAIRMAN. Thank you very much.

Mr. WRABETZ. Thank you.

The CHAIRMAN. Mr. John Lewis Smith and Gen. John Thomas Taylor will be the next witnesses. Will you come forward please? You gentlemen represent the American Legion, I believe. Is that correct?

STATEMENTS OF BRIG. GEN. JOHN THOMAS TAYLOR, DIRECTOR, NATIONAL LEGISLATIVE COMMITTEE, AND JOHN LEWIS SMITH, VICE CHAIRMAN, NATIONAL ECONOMIC COMMISSION, THE AMERICAN, WASHINGTON, D. C.

General TAYLOR. That is right, Mr. Chairman. I just want to present our witness to you.

Mr. Chairman, gentlemen of the committee, and Senator Smith: from Maine, we are not here speaking for any labor group or any employer group. Our interest in this matter is in the subject of unemployment. We are speaking for the vast body of veterans. There are 18,000,000 of them at the present time. The World War I veteran is in the average age of 55 to 56, and the World War II veteran in the average age of 28 to 30, and the curve of unemployment is steadily on the rise. We have had, during these past 4 years, some 8,000,000 World War II veterans attend schools, colleges, and universities, increasing their knowledge and their availability for employment. We are having 2,156,000 now in schools, colleges, and universities, who are coming out seeking a higher standard of employment. And they are having very, very difficult times; particularly the veterans of World War I, who are in that age group of 55 to 60.

We have been interested in the Wagner-Peyser Act from the very beginning. We are interested in the employment opportunities that must be provided for this vast volume of veterans. And it is to that point that we address our comments today.

The CHAIRMAN. All right. We shall be very glad to hear from Mr. Smith. Will you please identify yourself for the record, Mr. Smith? Mr. SMITH. I am John Lewis Smith, of Washington, D. C., a practicing attorney in the District of Columbia, and vice chairman of the national economic commission of the American Legion.

The CHAIRMAN. I will say that we wanted to hear one other witness this morning at least, and while I do not like to restrict anyone as to time, or as to whatever points he may wish to make, we would appreciate it, in the interest of others as well as the committee if you would make it as brief as you can.

Mr. SMITH. I have a prepared statement which I desire to have incorporated in the record. The CHAIRMAN. It may be incorporated in the record at this point. Mr. SMITH. Thank you.

(The prepared statement of Mr. Smith is as follows:)

STATEMENT OF JOHN LEWIS SMITH, VICE CHAIRMAN, NATIONAL ECONOMIC COMMISSION, THE AMERICAN LEGION

Mr. Chairman and members of the committee, my name is John Lewis Smith, practicing attorney in the District of Columbia and vice chairman of the national economic commission of the American Legion. I appear before this committee